How to withdraw funds from a Private Limited Company (sp. z o.o.) and minimise tax burdens

July 13, 2026

A private limited company (spółka z ograniczoną odpowiedzialnością) is a separate taxpayer – it pays corporate income tax (CIT) on its profits, and only when profits are distributed to shareholders does a further taxable event arise. As a result, profits may be taxed twice: first at the company level (CIT), and then at the shareholder level (PIT or CIT). In practice, however, there are several ways to reduce or even eliminate the effect of double taxation.

Dividends – the standard route and its tax cost

The simplest and most common way of distributing profits is through dividends. These are subject to a flat 19% PIT (or CIT, where the shareholder is a company). With the standard CIT rate of 19%, the effective taxation of profits distributed as dividends amounts to approximately 34.4% in total (19% CIT at company level plus 19% PIT on the remainder). With a 9% CIT rate (for small taxpayers), the effective burden falls to about 26.3%.

Dividends are not subject to social security or health insurance contributions – his is their main advantage compared with remuneration. However, dividends may only be distributed after the end of the financial year, are dependent on realised profits, and require a resolution of the General Meeting of Shareholders.

Remuneration for serving on the Management Board

A shareholder who serves as a member of the management board may receive remuneration based on a shareholders’ resolution. Since 2022, such remuneration (paid without an employment contract) is subject to health insurance contributions – 9% of income. It is also subject to PIT according to the progressive tax scale, although it does not give rise to social security contributions. The remuneration constitutes a tax-deductible expense for the company, thereby reducing its CIT base.

An alternative is to enter into an employment contract or a management services agreement (management contract). The latter – if performed without the subordination typical of employment – may be carried out as part of the shareholder’s sole trader activity, allowing the application of a flat 19% tax rate and optimisation of health insurance contributions.

Estonian CIT – a structural solution to double taxation

The flat-rate taxation of companies’ income, commonly referred to as “Estonian CIT”, is a solution that effectively eliminates double taxation. Under this model, the company does not pay CIT on current profits – the tax is deferred until profits are distributed.

When dividends are paid, the company settles the tax, but the shareholder benefits from a deduction that neutralises or significantly reduces their PIT liability. Where formal conditions are met, the combined effective taxation (CIT + PIT) amounts to:

• 20% for small taxpayers (the shareholder deducts 90% of the CIT paid by the company),
• 25% for other taxpayers (the shareholder deducts 70% of the CIT paid by the company).

To apply Estonian CIT, the company must, among other things, employ at least three employees (other than shareholders), must not hold shares in other entities, and its passive income (interest, royalties) must not exceed 50% of total revenue.

Loans from the Company

A shareholder may also receive funds from the company in the form of a loan. The loan itself does not generate taxable income – it is merely a cash transfer. However, several issues must be considered:

• Interest on the loan constitutes income for the company (reducing the shareholder’s overall benefit).
• If the loan is interest-free or below market terms, tax authorities may adjust income on both sides under transfer pricing rules.
• The loan must be repaid – the shareholder cannot permanently treat these funds as their own.

For these reasons, loans are typically a temporary solution (e.g. financing private expenditure before a dividend decision), rather than a long-term tax optimisation strategy.

Leasing property or other assets to the company

A shareholder who owns real estate or other fixed assets may lease them to the company. Rental payments constitute a tax-deductible expense for the company (thereby reducing its CIT), while the shareholder earns income taxed under a chosen regime – e.g. flat-rate taxation at 8.5% or 12.5% (for private rental income exceeding PLN 100,000 per year).

It is crucial that the rental terms reflect market conditions – the transaction between the shareholder and the company is a related-party transaction and may be subject to transfer pricing scrutiny.

Summary – which option to choose?

The optimal method of withdrawing funds from a company depends primarily on the scale of operations, the shareholder’s tax situation, the level of income, and long-term objectives (e.g. reinvestment). There is no one-size-fits-all solution – it is advisable to conduct a tailored analysis for each case, taking into account current regulations and the shareholder’s individual circumstances.

Tags company, dividend, dywidenta, profit distribution, spółka, wypłata zysku