Pay tax only when you distribute profit. See if your company will benefit — and by how much.
1. What is Estonian CIT
Estonian CIT (formally: lump-sum tax on company income — ryczałt od dochodów spółek) is a taxation system in which corporate income tax is paid only when profits are distributed to shareholders — not annually on income earned. As long as profits remain in the company and are reinvested, CIT equals 0 PLN.
2. Rates and deductions
3. Entry conditions
Legal form: sp. z o.o., limited joint-stock partnership (sp.k.), joint-stock company (S.A.), S.K.A.
Shareholders: only natural persons (no corporate shareholders).
No shares in other companies (except foundations).
Employment: minimum 3 full-time employees (or equivalent FTE in salaries).
No financial activity (banks, insurance, funds).
4. When it pays off — 4 scenarios
Growth company — you reinvest most profit into product/marketing → Estonian CIT usually wins.
Stable family company — you pay most profit as a dividend → Estonian CIT saves 5–15% annually.
Company building reserves — accumulating capital for a future investment → Estonian CIT defers tax.
Company with high investment costs — classical CIT may be better due to depreciation allowances.
5. Traps — hidden profits
Management/shareholder remuneration exceeding 5× the national average salary.
Loans granted to shareholders.
Benefits provided to shareholders (cars, housing, equipment).
Donations and expenses unrelated to business activity.
Estonian CIT taxes hidden profits at the corporate rate — beware of:
6. Selection procedure
Filing the ZAW-RD declaration by the end of the first month of the tax year.
Correcting advance payments for January (if already paid).
Amending the articles of association (if they contain classical CIT provisions).
Updating bookkeeping — different chart of accounts, no tax depreciation.
7. FAQ
Who can choose Estonian CIT?
Limited liability companies (sp. z o.o.), limited partnerships, joint-stock companies and limited joint-stock partnerships whose partners are exclusively natural persons. The company must employ at least 3 people (excluding partners) or meet the FTE requirement in remuneration.
What are the Estonian CIT rates for 2026?
10% for small taxpayers (revenue up to ~PLN 9 million per year) and 20% for others. Combined with PIT on dividends, the effective rate is around 20–25%.
When is it NOT worth it?
When you reinvest all profits back into the company and pay no dividends — then standard CIT at 9% may be better. When payouts effectively exceed 50% of profits, Estonian CIT usually wins.
Can I switch back to standard CIT?
Yes, you can apply to return after a minimum of 4 years from choosing Estonian CIT. Earlier exit only if eligibility conditions are lost.
What about hidden profits?
Estonian CIT also taxes 'hidden profits' — partner remuneration above market rate, loans to partners, certain benefits.