From this article you will learn:
- From when does the minimum CIT apply?
- For what purpose was the minimum CIT introduced?
- Who is subject to taxation? The profitability criterion
- Are any exclusions provided? Protective mechanisms (Safe Harbours)
- Methodology for calculating the tax base
- Minimum tax vs. standard CIT – the compensation mechanism
- Why should CFOs analyse this tax?
- Summary: Why is it worth acting now?
From when does the minimum CIT apply?
As of 1 January 2024, the Polish tax system was supplemented with the mechanism of the minimum CIT tax, commonly referred to as a tax on losses or low profitability. Although the regulation has been amended multiple times, its practical significance will only become apparent at the stage of settlements for 2025, filed in the CIT-8 return by the end of March 2026. Therefore, this year a broad group of taxpayers will, for the first time, face a real obligation to pay the new levy.
For what purpose was the minimum CIT introduced?
The legislator’s objective was to limit situations in which CIT taxpayers – despite a significant scale of business activity – report tax losses or minimal income in relation to the revenues generated. For CFOs and management boards, it is crucial to understand that this tax is not calculated on actual income, but on a specifically defined tax base. This, in practice, gives it the character of a revenue-based tax.
Who is subject to taxation? The profitability criterion
The minimum tax applies to CIT taxpayers who, in a given tax year:
• incurred a tax loss from sources of revenue other than capital gains, or
• achieved profitability below 2%, understood as the ratio of income to revenues from operating activities.
In practice, this means that even a company generating a positive gross financial result may fall under the minimum tax regime if the structure of tax costs significantly reduces taxable income. When calculating the profitability ratio, however, the regulations allow for certain adjustments, including depreciation costs or energy purchase costs, which in some cases makes it possible to increase the result above the critical 2% threshold.
Are any exclusions provided? Protective mechanisms (Safe Harbours)
The legislator has provided for a number of exclusions (so-called safe harbours) intended to protect entities in specific business situations. The most important include:
- Start-up period: Exemption in the year of commencement of activity and in the following two tax years.
- Sharp decline in revenues: Exclusion for entities whose revenues decreased by at least 30% compared to the previous year.
- Ownership structure: Exemption for companies whose shareholders are exclusively natural persons, provided that the company does not hold significant interests in other entities.
- Historical profitability test: A key mechanism for companies undergoing a temporary crisis – the tax will not apply if, in one of the three directly preceding tax years, the taxpayer’s profitability was at least 2%.
- Small taxpayers: Entities whose revenues do not exceed EUR 2 million gross.
Methodology for calculating the tax base
The minimum tax amounts to 10% of the tax base. The legislator has provided two alternative methods for determining it:
- Standard method: The tax base consists of the sum of: 1.5% of the value of operating revenues, excess debt financing costs incurred in favour of related entities (above 30% of EBITDA), and excess costs of intangible services (above PLN 3 million + 5% of EBITDA).
It is this element that causes the minimum tax to affect most significantly:
• real estate companies financed with debt,
• entities within capital groups,
• companies incurring significant intra-group service costs.
- Simplified method: The tax base amounts to 3% of the value of operating revenues. The choice of this method must be declared in the annual CIT-8 return.
Minimum tax vs. standard CIT – the compensation mechanism
The minimum tax is not an additional tax. If, in a given year, CIT calculated under general rules is lower than the minimum tax, the taxpayer pays the minimum tax. The amount paid may be deducted from CIT in the following three tax years. This is a mechanism that must be taken into account in multi-year tax and cash-flow planning.
Why should CFOs analyse this tax?
The minimum tax is not merely an issue for “loss-making companies”. In practice, it affects entities:
- with high levels of indebtedness,
- extensively using intra-group financing,
- implementing transfer pricing policies based on low margins,
- operating in industries with structurally low profitability.
A lack of prior analysis may result in a significant, unplanned tax burden, directly affecting the organisation’s financial liquidity.
Summary: Why is it worth acting now?
The minimum CIT tax will hit hardest industries with low margins and those whose business models are based on high leverage. In particular, real estate companies (SPVs) financed with loans from related entities may fall into the risk zone, even if they generate positive cash flows.
Given the complexity of the calculation algorithms and the numerous exclusions, carrying out a profitability audit for 2025 is already essential.
At KR Group, we support clients in the precise calculation of the tax base and in verifying available exemptions.
