When Poland introduced the Estonian CIT in 2021, many entrepreneurs approached it with caution. A few years later, nearly 20,000 companies are settling their taxes this way, and for a long time, the tax authorities watched from a distance. Data published by the Ministry of Finance shows that this grace period has just ended.
The tax office is no longer focusing solely on the tax settlements themselves, but primarily on whether a company had the right to choose this form of taxation in the first place. In many cases, it turns out that the election of the Estonian CIT was ineffective. Over 3.5 years, following the verification of notices on selecting the lump-sum tax, the tax authorities found 642 times that a company had chosen it ineffectively, 345 times that the notice was submitted incorrectly, and in 424 cases, companies failed to meet the conditions regarding shareholder structure, employment, or the level of passive income. From the beginning of 2025 to March 2026, tax shortfalls amounting to nearly PLN 42 million were identified across 64 taxpayers. That is an average of over PLN 650,000 per entity.
Conditions for Applying the Estonian CIT: Where Companies Make the Most Common Mistakes
Applying the Estonian CIT requires meeting a number of statutory conditions throughout the entire period of using the lump-sum tax. In practice, three areas generate risk particularly often. A single business decision is enough to inadvertently breach one of these conditions:
- Employment: The company must meet statutory conditions regarding the employment of non-shareholders. The risk arises particularly when the team composition changes during the year, there are gaps in employment, or the company fails to monitor whether the required employment level has actually been maintained.
- Passive income: Interest and receivables from loans and guarantees cannot exceed 50 per cent of all the company’s revenues in a given year. Companies that actively manage liquidity or finance business partners often exceed this threshold without tracking it on an ongoing basis.
- Shareholding structure: Only natural persons can be shareholders of a company using the Estonian CIT, and the company itself cannot hold shares in other entities. The entry of an investment fund, the establishment of a subsidiary, or the acquisition of shares in another entity may result in the loss of the right to the lump-sum tax and the obligation to settle tax under general rules.
None of these decisions are typically made with taxes in mind. However, any of them can turn months of Estonian CIT benefits into tax arrears along with interest.
Hidden Profits in the Estonian CIT: Risks to the Company and When the Tax Office Levies Tax
A separate category of risk involves so-called hidden profits (ukryte zyski) – transactions or benefits that may be treated as a form of profit distribution other than a classic dividend. If a given transaction is classified as a hidden profit, the company may be obliged to pay tax regardless of whether a formal payout of funds occurred. In practice, this can limit, or in extreme cases even negate, the benefits of the Estonian CIT.
Hidden profits may include loans to shareholders, private use of company cars, or non-market rates in transactions with related parties. From 2026, some companies will be subject to the JPK_KR_PD (Standard Audit File for Corporate Income Tax), which will increase the transparency of accounting data and make it easier for tax authorities to identify risky transactions.
Detailed data regarding the verification of taxpayers using the Estonian CIT was presented in the Ministry of Finance’s response of 30 April 2026 to parliamentary interpellation No. 16439. Some of this data was also discussed by the Dziennik Gazeta Prawna daily, highlighting, among other things, the number of companies filing the CIT-8E return for 2025 and the scale of verification activities conducted by the tax administration.
Estonian CIT Audits: Why a Verification Procedure is More Dangerous Than a Classic Tax Audit
The tax authorities have two tools for checking companies on the Estonian CIT. They can conduct a classic customs and tax audit, which is lengthy and costly, or a verification procedure (czynność sprawdzająca) to confirm the correctness of selecting the lump-sum tax, which is quick, simple, and – as the Ministry of Finance data shows – increasingly common.
The difference in consequences is fundamental. A classic audit might challenge a specific error in a settlement and end with the correction of a single item. A verification procedure strikes at the foundation. A company may lose its right to the Estonian CIT if it ceases to meet the statutory conditions required for this form of taxation. This means having to revert to the classic CIT, settling the tax on the net profit achieved in the year the lump-sum tax ended, and paying the tax on the initial adjustment (korekta wstępna). On top of this comes a three-year grace period – the company cannot opt for the Estonian CIT again for 36 months.
Estonian CIT in 2026: The End of the First Cycle and the Decision to Continue
For a large proportion of companies that opted for the Estonian CIT in 2022, the first four-year period of its application ended at the close of 2025. This is a moment that requires a decision: whether to continue with the Estonian CIT or revert to classic taxation rules. If the company does nothing, the extension for another four years happens automatically. And this very automaticity is a trap for those who failed to review their situation before the end of 2025.
Opting out is possible at the end of each tax year by submitting the appropriate information in the CIT-8E declaration. The decision to continue, however, requires an analysis not only of the benefits enjoyed so far, but also of what awaits the company in the next cycle. The planned changes to the Estonian CIT aim to tighten the system and limit the potential for abuse, meaning companies will have to monitor relationships with related entities more closely and plan dividend payouts more carefully. You can read more about the planned changes in the analysis of the draft amendment to the Estonian CIT.
How Many Companies Use the Estonian CIT and What It Means for the Scale of Audits
As reported by Dziennik Gazeta Prawna, citing the Ministry of Finance’s response of 30 April 2026 to parliamentary interpellation No. 16439, out of the 19,746 companies that submitted the CIT-8E return for 2025, as many as 18,900 were limited liability companies (sp. z o.o.). This shows that the Estonian CIT remains a popular solution, but at the same time, it continues to be an area closely scrutinised by the tax authorities.
If your company chose the Estonian CIT and has not verified the conditions for its application since then, now is a good time to do so. Not just to check the tax settlements, but above all to ensure that the company has genuinely met all the required conditions throughout the entire period the lump-sum tax has been in effect. And if a company entered the Estonian CIT in 2022 and did not submit an opt-out notice in the CIT-8E declaration for 2025, it automatically entered the next four-year cycle.
If you would like to verify whether your company meets the conditions for applying the Estonian CIT, or to assess the risk of your choice of this taxation form being challenged, please feel free to contact us.
