On the 15th November, the President signed an amendment to tax laws that implement solutions stipulated in the so-called Polish Deal. The new law is to enter into force from the beginning of 2022.
In mid-May, the Polish government presented a program of reforms for the coming years, known as the Polish Deal. On September 8, the first detailed draft of the acts related to the reform appeared in the Parliament. From this time Parliament worked on the final version of the new regulations.
The original version of the draft was subject to many unexpected changes, and the final version of the Polish Deal is different from the original one. Hence, it is important to analyze the final version of the Polish Deal and its tax and social security consequences for regular employees or service providers.
What changes result from the amendments to the acts?
The amendment to the tax acts results in a number of changes in relation to individuals, which are listed in the table below.
What does this mean for me?
The entry into force of the solutions provided for the Polish Deal will radically change the Polish tax system. According to the main assumptions of the draft amendment, the richest individuals will be the most impacted by changes in a tax law. This mainly arises from the loss of the possibility to deduct the health insurance contribution in PIT.
All the changes listed below resulting from the amendment to tax laws require a detailed analysis of employers, employees and entrepreneurs.
| Solutions resulting from the currently applicable regulations | Solutions resulting from the Polish Deal |
|---|---|
| Possibility to deduct 7.75% of the health insurance contribution from the tax due (no possibility to deduct 1.25%) | It is not possible to deduct 9% of the health insurance contribution from the tax due |
| Tax-free amount in the amount of PLN 8k | Increasing the tax-free amount to PLN 30k |
| The tax threshold of PLN 85,528, above which the 32% PIT rate applies | Increase to PLN 120,000 tax threshold, above which the 32% PIT rate applies |
| Possibility of preferential tax settlement by a single parent (recognition of the child as a family member and settlement together with the child) | Elimination of preferential tax settlement for single parents and replacing it with a deduction of PLN 1,500 per year from tax due |
| Treating individuals returning from abroad in the same way as other taxpayers; the possibility of excluding foreign income from taxation / crediting of tax paid abroad on the basis of agreements on the avoidance of double taxation | Introducing the PIT tax relief for individuals returning from abroad, which means that these individuals can benefit from income tax exemption up to PLN 85,528 per year for four years |
| The possibility of reconciling taxes by entrepreneurs with the Polish tax office in the form of a tax card that allows, inter alia, exemption from bookkeeping, filing tax returns and advance payments for income tax | Tax card liquidation; only taxpayers who reconciled taxes in the form of a card in 2021 will still be able to use it, but if they resign from this option, they will not be able to return to the card in the following years (this extension will not apply to doctors on civil contracts) |
| The possibility of tax settlement on the basis of a lump sum taxation according to the current statutory rates | Lowering some lump sum tax rates (e.g. for some IT services a reduction from 15% to 12%) |
| Possibility to deduct 150% or 100% of employee costs under the R&D tax relief | 200% of employee costs may be deducted under the R&D tax relief |
| Exemption from PIT only for the main claim (e.g. idemnity) | Exemption from PIT for late payment interest when the principal amount (e.g. idemnity) is also tax-exempt |
| Treating all taxpayers employed on the basis of an employment relationship who are over 26 years of age equally - taxation at the rate of 17% of income to the level of PLN 85,528 and the rate of 32% of the surplus; 7.75% of paid health insurance contributions can be deducted |
Implementation the "middle class tax credit" aimed at eliminating the negative effects of the non-deductibility of the health insurance contribution for taxpayers:
|
| No obligation to pay social security contributions and health insurance for members of the management board or proxies who receive remuneration on the basis of performing a given function | Mandatory health contribution in the amount of 9% without the possibility of deducting it for members of the management board or proxies receiving remuneration on the basis of performing a given function |
| The same amount of health insurance contribution determined annually for entrepreneurs using various forms of taxation: tax scale, flat tax, lump sum (regardless of the rate) and the possibility of deducting it from tax in the amount of 7.75% of the assessment base |
Diversified amount of the health insurance contribution depending on the chosen method of taxation and the inability to deduct the contribution from tax:
individuals taxed on the basis of a tax card - will pay a 9% health insurance contribution on the amount of the minimum wage |
| Treatment of all taxpayers over 26 years of age equally - taxation at the rate of 17% of income to the level of PLN 85,528 and the rate of 32% of the surplus; obligation to pay a solidarity surcharge by individuals earning more than PLN 1,000,000 (4% of the basis for calculating this levy) | Lump sum for people earning income from foreign sources in the amount of at least several million PLN per year. The preferences will be available to taxpayers who transfer their tax residence to the territory of Poland and who will incur expenses for the social purposes specified in the act (e.g. development of science) in the amount of at least PLN 100,000 in a given tax year |
| Treating all taxpayers over 26 years of age equally - taxation at a rate of 17% of income to PLN 85,528 and a rate of 32% of the surplus |
"Zero" PIT for:
Discounts limited to PLN 85,528 |
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