The amendment to the Act of November 28, amending, inter alia, the Act on PIT, CIT and lump-sum tax introduced many important changes for "lump sums". These changes entered into force on January 1, 2021.
Entrepreneurs who pay PIT tax can use a simplified form, i.e. a lump sum on recorded revenues. From January 1, 2021, the limit for a lump sum on recorded revenues has increased from 250 thousand euro up to 2 million euro, and the limit for quarterly advance payments from 25 thousand euro for 200 thousand euro.
The highest 20 percent so far. the rate attached to income generated in the field of liberal professions has been reduced to 17%. Currently, depending on the type of business, lump sum rates range from 2% to 17%.
Who is entitled to the lump sum?
People representing free professions, obtaining income from non-agricultural business activity performed personally, in addition to the tax reduction, benefited from expanding the catalog of professions covered by the lump sum. Currently, the following are also entitled to the lump sum: attorneys, notaries, legal advisers, construction engineers, architects, construction appraisers, auditors, accountants, insurance agents, reinsurance and insurance brokers, tax advisers, restructuring advisors, securities brokers, investment advisers, company agents investment, patent attorneys, psychologists, physiotherapists.
After the changes from 2021, a free profession is also activity performed for legal persons and organizational units without legal personality or for natural persons for the purposes of their non-agricultural business activities.
How is the attractiveness of PIT tax settlement increased?
The tax rate for liberal professions dropped from 20 percent up to 17 percent. The 15% rate applies to income from the provision of certain services, such as advertising, cultural and entertainment, architectural and engineering, financial and insurance (other than professional services).
For some groups of taxpayers who have so far accounted for 19 percent. with a linear PIT rate, it may be profitable to switch to a simplified form of settlements, i.e. a lump sum on recorded income - even though it is not possible to deduct tax deductible costs.
In addition, from 2021, a lump sum according to two rates (8.5% and 12.5% on excess revenues over PLN 100,000) is taxed on most of the revenues related to rental and accommodation.
10 percent the rate applies to revenues from the provision of services related to the purchase and sale of own real estate. Before the discussed changes, the provision of this type of services was excluded from the possibility of lump sum taxation.
"Little Rides" in the new package
It should be remembered that doubts may be related to the definition of the profession, and more precisely the scope of its performance. Therefore, a careful analysis of the regulations governing a given type of activity is necessary. For example, it should be considered when a given service can be considered to be performed as a freelance profession or, for example, which appraisers are entitled to a lump sum etc.
he choice of the form of lump sum taxation should result from the individual situation of the taxpayer, i.e. whether it is profitable to switch to 17 percent or 15 percent flat rate compared to 19 percent flat tax rate or 17 percent. First threshold rates by scale or, for example, consider issues such as the amount of costs incurred or joint settlement with the spouse. In the case of programmers, it may be important whether they create a qualified IP right (e.g. copyright to a computer program), which may give the possibility of taking part of their income with a preferential 5%. the rate related to the solution called IP Box. The choice of the lump sum will not allow the use of this preference.
Translating the above into a specific situation - a programmer providing services as part of business activity for an IT company and achieving, for example, revenues of about PLN 8,000 per month (PLN 96,000 per year) will pay 15 percent lump sum, ie PLN 14,400 of tax per year. Even with low tax deductible costs of around PLN 800 per month, it will be more profitable for him to settle on general terms, which also gives the possibility of joint settlement with his spouse or taking advantage of the child relief.
In another example, 19 percent. a flat rate for a freelance entrepreneur with income of around PLN 16,000 per month, with expenses of around PLN 800 per month, it may pay off to switch to a flat rate from 17 percent rate. When switching to a flat rate, the tax savings will amount to about PLN 2,000 per year.
Declaration on the choice of taxation in the form of a lump sum on recorded revenues
Regardless of the above elements, it is equally important to check who can choose lump sum taxation and how to submit a declaration on choosing this form of taxation.
In our opinion, the scope of the changes introduced means that the choice of the form of taxation for various types of activity should be preceded by a thorough analysis, but it definitely gives entrepreneurs a larger and more flexible range of available solutions.