The President signed a bill, called Anti-Crisis Shield law, which is intended to counteract effects of spreading COVID-19 virus. The signed act features a number of measures aimed at supporting employers and employees (including self-employed and workers hired based on civil law contracts) in potential challenges caused by the economic slowdown which many sectors are facing as the virus spreads. One of the assumptions behind the new law is to prolong, defer or suspend public charges in order to keep up the financial liquidity of businesses. The new law was published in the Official Journal of Poland.
Extended due dates for PIT advances
According to the Personal Income Tax (PIT) act, an employer is obliged to withhold PIT advances from employee’s monthly remuneration and pay them to the account of an appropriate tax office by the 20th day of the next month following collection of such advances from each employee.
The Anti-Crisis Shield law introduces a later due date for remittance of advances collected in March and April from employment income, income from mandate contracts and specific task contracts as well as income from copyrights. Therefore, a PIT advances would need to be paid by 1 June 2020 instead of, respectively, by 20 April or 20 May 2020. To be eligible for such deferred due date, a remitter needs to show that it has suffered negative economic consequences of COVID-19. However, the new law does not precisely state how a remitter can prove its deteriorated financial standing.
The new regulations should help keep financial liquidity of employers and protect jobs. Thanks to the extended due date for PIT advances, employers who are forced to suspend their operations for the duration of the quarantine period and hence find themselves in hardship as PIT advance remitters will be able to avoid penalty interests from late payments of tax advances.
Notably, the extended due date for PIT advances does not apply to individuals earning income from foreign employment contracts. Those individuals are required to pay monthly PIT advances directly to the tax office without any remitters’ assistance. As the new law does not cover employees who work in Poland based on non-Polish employment contracts, they should follow the standard payment due dates.
Filing of 2019 PIT returns before 31 May 2020 without penal fiscal consequences
In accordance with the provisions of PIT law the deadline for submission of annual tax return and for the payment of personal income tax due is 30 April 2020. However, the Anti-Crisis Shield law includes a provision enabling taxpayers to submit and pay PIT liability resulting from the tax return by 31 May 2020. Whereby, the new law indicates that the tax return submitted after 30 April and before 31 May 2020 will be treated as submitted along with the active repentance letter, i.e. a letter protecting the taxpayers from punishing with penalties provided in the Fiscal Penal Code.
It must be underlined that the active repentance letter does not protect the taxpayer against the obligation to pay penal interest from the late payment of tax. Therefore, it is unclear whether the payment of the tax after 30 April will result in the obligation to pay the penalty interest.
Financial support for employers
The Government decided to subsidise a share of employees’ compensations and their social security contributions (the part of contributions covered by the employer).
It is important to note that a salary which an employee would receive partially financed by the state would still be recognised as employment income that is taxed with PIT and subject to social security/health insurance contributions. Social security and health insurance contributions in a part due from employee still need to by collected and remitted to a dedicated account held by Polish Social Security Institution (ZUS).
A firm is eligible to apply for the subsidy with respect to all or some of its employees who suffer from the economic slowdown or reduced working hours as a result of COVID-19 spread.
Businesses harmed by 15% or 25% drop in their turnover (compared to a certain reference periods defined in the draft law) will be eligible to obtain 3 months of subsidies from the Guaranteed Employee Benefit Fund (FGŚP), up to a half of the salary of a given employee but no more than 40% of the national average wage published by the Central Statistical Office (GUS).
The subsidy will also apply to businesses which hire disabled employees – they can apply to be compensated for salaries paid to such disabled employees with the employer's internal funds. The compensation will be proportionate to the number of days in a given month when the employer's activity have been suspended or to the reduction of income from this activity. The application for such compensation should be filed with the appropriate branch of the State Fund for Rehabilitation of Disabled Persons (PFRON).
Postponing of social security and health insurance contributions for firms
The Social Security Institution can defer the due date for social security and health insurance contributions, up to 3 months, upon request submitted by a firm that experiences hardship in payments of such contributions.
The firm should fill in and submit a dedicated and simplified application for contribution postponing or debt repayment suspension – the form is available at ZUS website. The application should include a description how the coronavirus epidemic has impacted the financial standing of the firm and led to its inability to make timely payments.
If an agreement is reached with the Social Insurance Institution, no default interest will be charged from the day which will follow submission of the application for a debt relief. The new law also proposes a waiver of the extension fee which would otherwise apply instead of default interest.
Micro-entrepreneurs employing less than 10 insured persons can be exempted from the social security contributions (including health insurance and Labor Fund contributions), due for the period from 1 March 2020 to 31 May 2020, if they were registered as remitters of social security contributions before 1 February 2020. The exemption applies to the amount of contributions paid by the micro-entrepreneur for his own insurance as well as contributions due from the remunerations paid to the employees and contractors employed.
However, exemption from payment of contributions does not exempt from the obligation to submit settlement statements to ZUS.
Similarly, self-employed persons can apply for the exemption from social security and health insurance contributions for 1 March to 31 May 2020, if their income from the economic activity obtained in the first month for which the application for exemption from social security contributions is submitted was not higher than 300% of the national average wage.
The application for exemption from social security contributions must be submitted by 30 June 2020.
Self-employed persons and people hired based on non-employment contracts regulated in the civil law (for example, mandate contracts) can apply for a one-off downtime benefit up to 80% of the national minimum wage, if they suffered downtime as a consequence of COVID-19. However, in certain circumstances it will be possible to apply for downtime benefit more than once. The requester will be entitled for a downtime benefit if she/he is not subject to the social security contributions under the another legal title.
A person hired based on a civil law contract that is not an employment contract will be eligible for such downtime benefit, if his or her contract was concluded on 1 February 2020 or earlier and the income from the civil law contract obtained in the month preceding the month in which the application for downtime benefit was submitted was not higher than 300% of the national average wage for the previous quarter.
The downtime benefit will be exempted from PIT.
Financial support for authors and artists
Certain financial assistance will be available also to authors and artists whose activity cannot be continued as previously due to official restrictions, prohibitions and orders published in connection with the threat of epidemic.
It should be pointed out that persons earning money from a creative activity, including employees who perform creative work during employment-related duties and taking advantage of the statutory deductible expenses at the higher rate (50%), even today are eligible to deduct the full sum of actual expenses which they incurred, even if they exceed the mentioned threshold, as long as they can provide a reasonable justification for such expenses. As such, authors who invested in projects that have not been successful in the end because of the epidemic should be able to deduct such expenses, if they can prove that the expenses were incurred with the aim of earning income.
Extension of resident visas and residence permits
The deadline for filing residence permit applications on behalf of non-Polish employees (including temporary stay, permanent stay, long-term EU residency applications) and the validity of visas (if the period of validity of a visa or a permit ends during a period of an epidemic) will be also extended up to 30 days after the day when the epidemic will be officially called off.
Extended validity of public administration decisions and more flexible labour regulations
As operation of many public administration bodies has been limited, certain authorities are not able to carry out their statutory tasks on an ongoing basis. The new law proposes an extended validity of many public administration decisions, for example extended validity of periodic medical exams of employees and extended validity of disability decisions (required to qualify for social security benefits).
In addition, the new law also proposes more flexible approach to Labour Code regulations, for example option to extend the daily limit of working hours, employer-employee arrangements of employment conditions that are less favourable for employees than the original employment contract.
An employee who is affected by the employer’s economic slowdown can be paid a reduced salary, however the reduction cannot exceed 50% and the salary cannot be lower than the national minimum wage.
Deferred requirement for medium enterprises to implement Employees Capital Pension Schemes (PPK)
Mid-sized enterprises that employ 50 employees or more (up to 249) will have more time to conclude agreements for the management and conduct of Employee Capital Pension Schemes (PPK). Currently the deadline to make such agreements expires respectively at the end of April and at the beginning of May 2020. The new law proposes extension of such deadline by as much as 9 months so that, in the times of economic hardship, businesses are not forced to incur extra expenses for implementation of such schemes.
Child care allowance
Parents are allowed to take extra 14 days off as a paid child-care leave, if their child is up to 8 years old or disabled and a nursery or other qualified day care facility for children or a school has been closed for coronavirus reasons, and also when care of a child cannot be provided by a nanny or a carer because of COVID-19. An employee released home to take care of his or her child can apply for such benefit up to 80% of the sum that is the benefit assessment basis, unless the employee is entitled to receive standard salary for that period.
Increasing the limits of PIT exemptions
In the draft adopted by the Parliament the Government has increased some of the limits of exemptions included in PIT law. This refers to, inter alia, the value of benefits in kind received by employees, financed entirely from the company social benefits fund or trade union funds.