Offshore Jurisdiction Review: Is Poland A Tax Haven?

Why Choose Poland as an Offshore Tax Haven?

The Central European nation of Poland is not the first place that comes to mind when people think about offshore tax havens. Although it is not officially recognised as one, Poland can serve as an excellent tax haven option for those looking for a low-tax European nation with a good international reputation. 

Poland is particularly attractive to incorporate a company offshore and utilise their favourable corporate tax regulations. They also offer low personal income tax rates, and various ways to reduce taxes through deductions and exemptions. This makes Poland a great all-rounder, where one can legitimately and significantly reduce their taxes without the reputational risks and added scrutiny that comes with using a recognised tax haven in, for example, the Caribbean. 

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Table of Contents:

• Why Choose Poland As An Offshore Tax Haven?
• Benefits Of Setting Up An Offshore Business In Poland
• Background Information About Poland As A Tax Haven
• Location
• Political Structure
• Economy And Infrastructure
• Population, Language And Culture
• Exchange Control
• Type Of Law
• Principle Corporate Legislation
• Taxation
• Personal Income Tax
• Corporate Income Tax
• Additional Incentives For R&D

The Benefits

• Low corporate tax rates: Poland has low corporate tax rates by EU standards, with talk of introducing a 0% corporate tax rate in future under certain conditions. 
• Low personal income tax: Poland has generally low personal income tax rates, with a tax scale ranging from 12% to 32%. 
• Additional tax incentives: new tax reforms called the “Polish Order” came into effect on 1 January 2022. Under these reforms, there are now major tax incentives offered to specific industries and entities, such as R&D. There are also special tax breaks offered to younger workers.
• Ideal offshore banking centre: Poland has established itself as a centre for offshore banking with its efficient and innovative banking system. It is easy for foreigners to open an offshore account in Poland. 
• Stable economy and political system: Poland is a politically stable EU nation with a high performing economy, good infrastructure, and low unemployment rates
• Poland is an ideal jurisdiction to incorporate an offshore company for tax purposes, due to the following reasons:
• It offers affordable accounting and administration services.
• Provides access to a cheap and skilled workforce for those who are looking to incorporate an operating company as opposed to only a holding company.
• Low license and maintenance fees for offshore companies.
• 100% foreign ownership is permitted.
• You can form a company with only one director/shareholder who can be the same person.
• There are low minimum capital requirements.
• An offshore LLC in Poland provides limited liability protection to its members. Only the capital which they have invested in the company is at risk in the case of bankruptcy or litigation.
• Fast and simple registration process.
• Access to investment opportunities: opening an offshore bank account or incorporating an offshore company in Poland can be an excellent doorway to take advantage of their many excellent investment opportunities. They have a thriving real estate market with annual returns consistently above 10%.
• Excellent quality of life: if you are planning to physically relocate to a tax haven for tax reasons, you want it to be a good place to live. Poland offers just that. The cost of living is low which can further help you save money. Infrastructure, amenities, education, and health care are all top quality. It also has a vibrant entertainment scene and rich cultural history for you to enjoy during your time there.  

Background Information about Poland as a Tax Haven

Location

Poland is located in central Europe and forms part of the EU. It is divided into 16 administrative provinces called voivodeships and covers an area of 312,696 square kilometres. 

Previously a part of the Soviet Union, it now shares borders with Lithuania and Russia to the northeast, Belarus and Ukraine to the east, Slovakia and Czech Republic to the south, and Germany to the west. To the north lies the Baltic Sea, where Poland shares maritime boundaries with Denmark and Sweden.  

Political Structure

Poland is a unitary parliamentary republic and representative democracy. The president serves as the head of state, while executive power lies with the council of ministers which are led by the prime minister as head of government. The prime minister is also responsible for selecting the council of ministers. The president is elected by popular vote through democratic elections for a five-year term.  

The current president of Poland is Andrzej Duda, who has served since May 2015 and was re-elected in 2020 for another five-year term. The prime minister is Mateusz Morawiecki, who has served since 2017 for the current ruling party Law and Justice (PiS). 

Economy and Infrastructure

Poland has a strong economy and a well-developed infrastructure. Its GDP stands at the 6th largest in the European Union by nominal standards, and the 5th largest by purchasing power parity. The economy continues to grow at a rapid rate compared to other EU nations. 

It has a low unemployment rate of only 2.6% as of July 2022, according to Eurostat. This is the second lowest in the European Union and well below the average of 6%.  

The major driver of Poland’s economy is its exports of goods and services, which is the 20th largest in the world and accounts for nearly 60% of its GDP. Its two largest sectors by employment levels are tertiary services and industry & manufacturing. It has a good infrastructure with efficient transport and energy systems. It is an important trade hub due to its ideal location in central Europe. 

Population, Language and Culture

Poland has a population of approximately 37.7 million. About 60% live in urban areas and 40% in rural. Most of the population are of Polish origin (approximately 97%). 

Polish is the main spoken language in Poland, with 97% of the population speaking Polish as their mother tongue. There are 15 minority languages spoken across different regions of Poland. Approximately one third of Polish citizens claim to have knowledge of the English language. 

Poland has a rich cultural history dating back more than 1000 years. The Poles have a strong cultural and national identity, often wearing national symbols such as the white-tailed eagle on clothing and emblems. Poland is home to 17 recognised UNESCO World Heritage Sites and has over 100 other sites enlisted in the Historic Monuments Register. 

Exchange Control

Poland does not enforce any foreign exchange controls, and the PLN is freely convertible. Under the terms of Poland’s EU accession, it is required to adopt the Euro, but there is no fixed date for when this will happen. 

Type of Law

The highest law in Poland is the ‘Constitution of Poland’, which follows the civil law tradition and upholds the principles of civil rights. Poland’s democratic constitution guarantees a multi-party state with freedoms of religion, speech, and assembly. 

Principle Corporate Legislation

The Polish Companies’ Code governs Polish LLC’s and other corporate bodies, and sets out all relevant rules and regulations.

 

Taxation

Poland does not have the kind of extremely low or zero tax rates as other major tax havens, but it offers enough incentive to consider relocating or incorporating an offshore company within its borders. 

Personal Income Tax

It has a generally friendly income tax regime, whereby individuals are taxed on a progressive scale from 12% to 32% (well below EU norms). The first 30,000 PLN earned annually is tax-free. Furthermore, in 2019, Poland passed a new law which exempts workers under the age of 26 who earn less than PLN 85,528 (EUR 18,170 at the time of writing) per year from all income tax.

It was introduced to try curb the “brain drain” that Poland was suffering from, with many of the youth relocating to Western Europe for work opportunities. This is now a major incentive for young workers to remain in Poland or even migrate there from abroad. 

Corporate Income Tax

Of even greater attraction for those looking to utilise Poland as an offshore tax haven is its corporate tax regime. Corporate income tax is levied at a flat 9% on profits up to EUR 2 million, and 19% for all profits above that, which is again below the EU average of approximately 24%.

There was also talk of introducing a 0% corporate tax rate on all profits below PLN 100 million (about EUR 21 million) in a bid to incentivise offshore investment and incorporation in Poland. However, these plans have been put on hold for the moment and it is unclear if and when it will come into effect. It is also not clear whether the current dividend tax rate of 19% will be subject to reduction.

Additional Incentives for R&D

At the start of 2022, Poland introduced another major tax incentives package to boost innovation and attract foreign investors to Poland, known as the “Polish Order”. These incentives apply specifically to entities which are “carrying out research and development (R&D) activities, investing in automation of production plants, enhancing or developing new products and/or services, developing patents and expanding businesses through developing new products or acquisitions”.

The incentives include a number of deductions and tax breaks for these entities subject to qualifying conditions and have resulted in significantly reducing their tax burden. 

Polish Offshore Company Formations From Offshore Protection

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