On October 28, the Sejm passed an amendment to the provisions of the Corporate Income Tax Act, introducing tax solutions, commonly known as “the Estonian CIT”.
Just to remind, this is a special tax regime that provides for taxation of income only at the time of distribution or allocation of funds for private purposes of the shareholders.
The conditions for using this mechanism are:
- having the status of a company (limited liability or joint stock company), where the revenues of such a company do not exceed PLN 100 million;
- such entity can be owned only by natural persons;
- such entity holds no shares in other entities,
- employment of at least 3 employees, excluding shareholders;
- obtaining a surplus of “active” (operating) over “passive” income;
- making investment outlays.
The basic rate is 15% or 25%.
The structure of the mechanism of this solution raises numerous discussions. At the moment, it has not been decided, for example, to apply this regime to companies other than capital companies or to cooperatives. The category of investment expenditure does not include expenditure related to intangible assets.
Currently, the amending act will go to the Senate. It is possible that it will propose further amendments to it. They will later be considered by the Sejm.
Planned entry into force – from the beginning of 2021.