Limited Liability Company Sp. Z o. o. is a popular legal form of doing business in Poland . More and more people are choosing this particular form rather than, for example, a sole proprietorship.
But some people still doubt it. This is because the:
- Withdraw money from the limited liability company Sp. Z o. o. is complicated and difficult
- Withdrawing money from the limited liability company Sp. Z oo, you will be subject to double taxation and will have to pay income tax twice.
Fortunately, there are simple and practical solutions to legally deal with double taxation and formal obstacles to withdrawing money from a limited liability company in Poland.
True, the changes introduced since 2022 are too Polish. Polski Ład which may limit some of these possibilities, but this does not mean that they will disappear or that no new ones will appear.
BUT, it is first necessary to understand how income taxation works in a limited liability company in Poland. A company has its own legal personality, which usually means that it is a separate person – separate from, for example, the company’s partners.
Therefore, if a limited liability company declares income, this income is subject to income tax – lenk. CIT. The logic is obvious: since a limited liability company is an individual, it has to pay taxes.
Only a limited liability company does not generate profits for itself, but only for the company’s partners (shareholders). Therefore, ideally, the company should pay a profit to the partners (shareholders) every year – the so-called dividends, so:
Disbursement of ninths (eg Wypłata dywidendy)
The company pays income tax of 9% or 19%
The company’s partner (shareholder) also pays 19%
Double taxation, 28% or 38% of the total payment
How to withdraw money from a Polish company and avoid double taxation?
There are several ways to do this:
Remuneration of a member of the Board for work performed – for appointment
(for example, the payment of a contract for the sale of goods)
First of all, you can reward yourself for being a member of the board. This solution will be useful and feasible, especially for small limited liability companies . In such companies, the partner shareholder (s) are usually at the same time a member (s) of the board.
The company pays income tax of 17% or 32%, health insurance tax of 9%
Reduction amount 5 zł (up to 120,000 zl profit)
Option A – to pay 119 thousand zł , income tax 15,130 zł, health insurance tax 10,710 zł (21.71%), transfer to the account 93,160 zł
Option B – to pay 200,000 zł, income tax 40,900 zł, health insurance tax 18,000 zł (29.45%) , transfer to the account 141,100 zł
Remuneration of a member of the Board + account for individual activities
( eg VAT on the supply of agricultural products and VAT)
For example, a company that generates a profit of PLN 240 000 (2 x 120 000) can pay a part of PLN 119 000 through the remuneration of a board member, the remaining amount being invoiced for its individual activities.
Sign a contract for specific work
What kind of jobs could it be? There could be tangible or intangible works (such as conducting training courses, a solemn event), or creating a new object (such as a picture or a new IT system).
Taxes payable: Only 50% or 80% of the remuneration under such a contract will be levied at a rate of 17% (when the amount claimed is less than PLN 85 000) or 32% (when it exceeds PLN 85 000), BUT depends on the service provided to the company. The tax on income received in Lithuania also contributes.
Transfer threshold 120,000 zł (example at 50% option): zł 119,000 to be paid, income tax 10.115 zł (8.5%) , transfer to the account 108.885 zł + tax in Lithuania
Rental of real estate or movable property for the enterprise
Leased property tax – 8.5%, in the case of a natural person, if it is a car rental , income tax in Lithuania is 15%
Subsistence allowance, travel expenses, training
(eg diet, podcasts and schoolchildren)
Business trip expenses and training can be paid by the company – payment of funds to the partner (shareholder) for expenses incurred during work (company expenses).
All the options described allow for a legal and efficient withdrawal of funds from a limited liability company in Poland . They will be particularly useful in smaller companies where the partners are involved in the business at the same time and have more freedom to withdraw funds from the company. Of course, all of these techniques are ideal for those who want to operate as a limited liability company rather than as an individual entrepreneur, for example.
The final decision lies with the entrepreneurs, and a detailed analysis of the regulations and their reference to the specifics of the business and the individual situation of the partners will undoubtedly allow them to choose the best option.