2021. április 27.

Digital Service Tax in Poland

Introduction planned for 1 July 2021

withholding tax regulations in Poland

A few years ago, the Digital Service Tax was rarely heard of in Europe. Now many EU countries have proposed, announced or already implemented some form of this tax type. Poland joined them in July 2020, when a payment to the Polish Film Institute equal to 1.5% of the revenue of streaming platforms from delivering content or for transmitting commercial messages (whichever figure is higher) was implemented. Now, Poland has gone one step further.

In February 2021, a draft of the legal act introducing the “advertising contribution” was published. Despite its name, its construction is based on the rules specific to the Digital Service Tax. Below we summarise our general assumptions. 

Traditional ads

The tax liability is imposed on revenues in the tax year in the amount of:

  • PLN 1,000,000 (roughly EUR 220,000) for broadcasting adverts on television, radio, displaying adverts at the cinema, and posting adverts on external storage,
  • PLN 15,000,000 (roughly EUR 3,300,000) for press advertising.

The tax rate assumed in the project varies between 2% to 15% of the tax base depending on the advertised goods and sources of income.

Online ads

The online advertisements are defined as digital services that enable the reproduction of audio or audio-visual material on recipient devices. According to the definition, advertising may take any form, e.g. sponsored article, audio advertisement, sponsored podcast, product suggestion on a website, tweet or post.

An entity becomes a Digital Service Tax payer if it provides online advertising services in Poland, and additionally meets the following conditions:

  • the service provider’s revenues (or consolidated revenues of the group to which the service provider belongs) exceed EUR 750,000,000 in the tax year, regardless of where the revenue is obtained,
  • the service provider’s revenues (or consolidated revenues of the group to which the service provider belongs) from online advertising services in Poland exceed EUR 5,000,000 in the tax year.

The tax rate for all online advertising is to be 5% of the tax base.

Purpose of the Digital Service Tax revenue

Poland plans to use the additional revenues derived from the Digital Service Tax to support those affected by the coronavirus pandemic (national health care system, culture and free media).

The introduction of the Digital Service Tax is planned for 1 July 2021. However, work on the project is still ongoing in Poland. On 12 March 2021 a meeting of the Committee on Culture and Media was held in this regard. There were many comments and questions regarding the solutions contained in the Digital Service Tax draft, including that the project does not cover all kinds of advertisement, such as telemarketing, the tax collection mechanism is not described clearly enough, and there is a lack of awareness of the long-term effects of the act. It was also argued that the increase in the price of the advertising will affect the final price of products, and therefore consumers.

If you would like to know more about the Digital Service Tax draft in Poland, please visit the homepage of WTS&SAJA Sp. z o.o., the exclusive representative of WTS Global for Poland.

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