An sp. z o.o. (limited liability company) settles income tax independently, as a legal person, and the shareholder pays their own tax only when they take money out of the company. The CIT base, however, is not the accounting profit but tax income: revenues less tax-deductible costs, corrected for items excluded by the CIT Act. Below we describe how to go from the result in the books to the tax amount, in what deadlines to pay it and how to use a loss from previous years.
Book result vs taxable income
The company keeps full accounts, so each month a financial result is produced under the Accounting Act. That result is the starting point but almost never equals the tax base. The differences come from three groups of events:
- expenses booked as costs that the CIT Act does not recognise — e.g. representation, part of liquidated damages, salaries not paid on time,
- revenues and costs recognised at a different moment — in accounting what matters is the period the event concerns, and in taxes also the date of performance of the service, invoice issue or payment,
- items excluded from tax revenue — e.g. part of revenues already taxed in another way.
For this reason, well-run companies keep, alongside the books, a schedule of tax adjustments. It links the accounting result with the amount reported in advances and in the annual CIT-8 return.
When revenue and cost arise
Under Article 12(3a) of the Corporate Income Tax Act, business revenue arises on the day the item is handed over or the service is performed (including partly), but no later than on the day the invoice is issued or payment is received. The arrival of money on the account is therefore not a condition — an invoice issued in December for a service performed in December goes into December's revenue, even if the client pays in February.
On the cost side, the Act distinguishes two categories:
- costs directly linked to revenue (e.g. goods bought for resale, a subcontractor on a specific project) — settled in the year in which the corresponding revenue arose,
- indirect costs (rent, accounting, software, marketing) — recognised on the date of being incurred, i.e. the day of entry into the books on the basis of the invoice; if they concern a period longer than the tax year, they are spread proportionally.
Employees' salaries have a separate rule. They are a cost of the month for which they are due, provided they are paid within the deadline from the contract or labour law. A late payment moves the cost to the month of actual payment.
Expenses that do not reduce the tax
Article 16 of the CIT Act contains a long list of expenses excluded from tax costs. In service companies the most common are:
- representation costs — in particular catering services, food and drinks bought to build the firm's image,
- liquidated damages and compensation for defects in goods, works and services, delay in delivering goods free of defects or delay in removing defects,
- fines and monetary penalties imposed in criminal, fiscal penal or administrative proceedings,
- private expenses of shareholders paid from the company's account — beyond not being a cost, they may be treated as a hidden profit distribution.
Such expenses can be booked and paid, but when calculating income they are added back to the tax base.
CIT rate, advances and the annual return
The Act provides two rates on operating income:
| Rate | When it applies (2026) |
|---|---|
| 9% | revenues in the tax year do not exceed the equivalent of EUR 2,000,000 (converted at the NBP rate from the first business day of the year), with exceptions, among others, for certain companies arising from restructuring |
| 19% | other taxpayers and income from capital gains |
The tax is not paid as a one-off after the year closes. Each month the company calculates cumulative income from the beginning of the year and pays an advance by the 20th day of the following month. Companies in the first year of activity and small taxpayers may choose quarterly advances, payable by the 20th day of the month after the quarter ends. The CIT-8 return is filed electronically by the end of the third month after the end of the tax year — for a calendar year, by 31 March — and in the same deadline the difference between the tax due and the sum of advances is paid.
Tax loss from previous years
When costs exceed revenues, a loss arises that can be settled over the next five tax years. Article 7(5) of the CIT Act gives two paths:
- reducing income in the following years, but in one year by at most 50% of the loss amount,
- a one-off reduction of income in one of those years by up to PLN 5,000,000, with the remaining part — in the following years, with a 50% annual cap.
For small companies the second option usually means the whole loss can be deducted in the first year in which income appears. It is worth remembering this when planning advances — the loss deduction is taken into account already during the year.
Example: from result to tax
A software services company closed 2026 with PLN 1,200,000 of revenue and PLN 900,000 of accounting costs. The pre-tax result is PLN 300,000. The accounting department establishes adjustments:
- dinners with clients (representation) — PLN 20,000, added to income,
- contractual penalty paid to a client for delay in removing defects in the implemented system — PLN 5,000, added to income,
- December salaries paid on 10 January, in line with the deadline in the contracts — stay as a December cost, no adjustment,
- loss from 2024 of PLN 80,000 — the company deducts it in one go in full.
Income: 300,000 + 20,000 + 5,000 = PLN 325,000. The base after deducting the loss: PLN 245,000. Because revenues did not exceed the EUR 2 million limit, the rate is 9% and the tax for the year is PLN 22,050. From this amount the advances paid are subtracted and any difference is paid by 31 March 2027.
What next with the after-tax profit
Paying CIT does not mean the money already belongs to the shareholder. The net profit stays in the company until the shareholders' meeting decides on its distribution. Dividend payouts, management board remuneration or invoices from a shareholder running their own business have different effects in PIT and ZUS — a review of all these burdens is in the article on taxes paid by an sp. z o.o., and the rules of CIT itself, including the lump-sum tax on company income (Estonian CIT), are described in the article on CIT in Poland.
How Good Balance will help
We run full accounting for sp. z o.o. companies: records of revenues and costs, a schedule of tax adjustments, monthly or quarterly advances, CIT-8 and the financial statements. We also help plan loss settlement and check whether the company meets the conditions for the 9% rate.