2025 amendments to PIT, CIT and flat-rate tax - key changes

A major amendment to income taxes - what has the government adopted?

The government has officially adopted the draft of a comprehensive amendment to the PIT, CIT and flat-rate tax on recorded revenue acts (legislative list no. UD116). Work on the document lasted more than a year, and the draft went through numerous modifications - some of the most controversial proposals were withdrawn after public consultation. Even so, the final version provides for more than 20 significant changes to income taxes, which will affect both business owners and private individuals.

The most important areas of change include: higher flat-rate tax rates for selected groups of taxpayers, modifications to Estonian CIT, new rules on the solidarity levy and amendments to the depreciation rules. The draft also introduces a favourable change for spouses - benefits to meet the needs of the family are to be exempt from PIT regardless of the marital property regime that applies between the spouses. Until now, this exemption was available only to couples with joint marital property.

The scale of the changes is large enough that every business owner and taxpayer should analyse how the amendment will affect their individual tax position. Below, we discuss the most important changes in an accessible way.

Higher flat-rate tax rates - who will pay more?

The draft introduces three fundamental changes to the flat-rate tax on recorded revenue. Their common denominator is limiting popular tax optimisation schemes used by company partners.

A 17% rate for transactions with related parties

The first key change is the introduction of a 17% flat-rate tax rate for business owners who run a sole proprietorship and are at the same time partners in a company to which they lease intellectual property - for example trademarks, patents, utility models or know-how. Until now, such revenue could be taxed at a rate of just 8.5% (or 12.5% on the excess over PLN 100,000), which gave a significant advantage compared with a dividend payment taxed at 19%.

The Ministry of Finance states explicitly that the aim of the change is to eliminate an optimisation mechanism in which both parties to the transaction obtain a tax benefit - the company (by treating the lease payments as tax-deductible costs) and the partner (through the low flat-rate tax rate).

An increase in the flat-rate tax on rental income above PLN 100,000

The second significant change concerns the rental of property to related parties. The draft provides for an increase in the higher flat-rate tax rate from 12.5% to 15% for rental revenue exceeding PLN 100,000 a year where the tenant is a party related to the landlord. To sum up the new rules for taxing rental income:

• Up to PLN 100,000 of revenue - rate of 8.5% (unchanged, regardless of whether the tenant is a related party)
• Above PLN 100,000 - rental to an unrelated party - rate of 12.5% (unchanged)
• Above PLN 100,000 - rental to a related party - new rate of 15%

This change applies to both private rental and rental carried out as part of a business activity, which means that a wide range of landlords will feel its effects.

Changes to Estonian CIT and the solidarity levy

The amendment introduces significant modifications to Estonian CIT (the flat-rate tax on company income), which are a mix of changes that are favourable and unfavourable for taxpayers. The most important proposals include:

1. A broader definition of hidden profits - taxation will apply not only to benefits generated while Estonian CIT is in use, but also to those covered from profits earned before switching to this form of taxation.
2. A more liberal employment condition - the change will make it possible to meet the employment condition also when contracts for services (umowa zlecenie) are combined with an employment contract, provided that the threshold of three times the average salary is reached.
3. An amnesty for late financial statements - companies that did not file their financial statements by the end of 2026, or filed them late, will be able to correct this by 31 January 2027.
4. A ban on switching to Estonian CIT during the tax year - a switch to the flat-rate tax on company income will be possible only from the start of a tax year.
5. A presumption of payment out of net profit after leaving Estonian CIT, which entails an obligation to pay tax (with certain exceptions).

As regards the solidarity levy, the draft introduces two key changes. First, taxpayers will gain the option of offsetting losses from previous years when calculating the levy base, which until now raised serious interpretative doubts. Second - and this is an unfavourable change - IP BOX income will be included in the base for calculating the solidarity levy. In practice, this means that people using the preferential 5% rate will pay an additional 4% tax on the excess above PLN 1 million.

Depreciation and other changes for business owners

The amendment also introduces significant changes to the rules on depreciation of fixed assets, which will have practical importance for many businesses. The first concerns passenger cars with a combustion engine. Until now, the CO2 emission level, on which the depreciation limit (PLN 100,000 or PLN 150,000) depends, was determined solely on the basis of data from CEPiK (the Central Register of Vehicles and Drivers). Because the data in this database is sometimes incorrect, the draft allows additional sources of confirmation of the emission level - a certificate of conformity (CoC) or a document issued by the Director of the Transport Technical Inspectorate.

The second change of major practical importance is a ban on retroactively changing depreciation rates. After the amendment enters into force, rates will not be able to be corrected once the deadline for filing the annual tax return has passed. The Ministry of Finance indicates that the retroactive correction mechanism was being used for tax optimisation. Importantly, the ban will cover only depreciation charges made from 1 January 2027.

It is also worth mentioning the clarification of the safe harbour mechanism for loan transactions between related parties. After the changes, this mechanism will apply only to loans with a variable interest rate (base rate + margin), which removes interpretative doubts concerning fixed-rate loans.

How to prepare for the changes? Contact our firm

The amendment adopted by the government is one of the most extensive packages of tax changes in recent years. Its impact will be felt by flat-rate taxpayers, company partners, landlords, taxpayers using IP BOX and Estonian CIT, as well as spouses accounting for family benefits. Some of the changes will enter into force from 2026, others - such as the ban on retroactive correction of depreciation rates - from 2027.

Each of the described changes may have far-reaching financial consequences for your business or personal situation. Do not wait until the rules enter into force - proper preparation and adjustment of your tax structure takes time. Contact our firm to obtain an individual analysis of the amendment's impact on your business and to work together on optimal solutions compliant with the new regulations.