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Taxes are an integral part of life in any country, including Poland. However, the Polish tax system is not always clear, especially for those who have recently moved. This leads to misunderstandings and frequent disputes, as well as legal proceedings. This is especially true in cases where entrepreneurs seek to reduce their tax obligations. The concept of “tax optimization,” which is often confused with tax evasion, actually refers to legal methods of reducing the tax burden. In this article, we will explore methods of “tax optimization” to help companies and their owners minimize their tax obligations.
Tax optimization in Poland is a legal practice that allows for the reduction or even elimination of tax payments. “Tax optimization” can pertain to virtually any public levy, but in practice, it most commonly refers to profit taxes, personal income tax (PIT), corporate income tax (CIT), and value-added tax (VAT).
For example, a limited liability company (Spółka z o.o.) is a legally independent organization that has its own legal personality, distinct from its owners (shareholders). Therefore, when a limited liability company earns income, it is allocated to the operation of the company, not the partners (owners). This income is subject to corporate income tax because the firm is responsible for its tax obligations.
In practice, companies typically allocate the profits they generate, including to their shareholders. In such cases, the familiar mechanism of dividend payments leads to double taxation: corporate income tax and tax on dividends for shareholders, as well as inefficient profit distribution within the company.
There are legal ways and methods of tax optimization in a Spółka z o.o. that allow for the avoidance of double taxation and ensure a fair distribution of profits between the company and its shareholders.
Below are popular examples of legal actions taken within the framework of “tax optimization”:
