The so-called Polish Order, which was signed in November 2021, introduced major changes to the Personal Income Tax Act and the Corporate Income Tax Act.
Most of the tax changes entered into force on January 1, 2022. At the same time, there are on-going preparations for the changes entering into force on 2023.
The tax changes implement new tax reliefs and preferences, but at the same time there are different types of new burdens for the tax payers, so it seems inevitable that the new regulations will have impact on the financials of the companies and individuals in Poland.
We’d like to present the most important ones.
Tax on companies that are CIT taxpayers
(including tax capital groups), which in the tax year:
➢ have suffered a loss from a source of income other than capital gains, or
➢ achieved the share of revenues from a source of revenues other than from capital gains in revenues other than from capital gains in the amount not greater than 1%
10% of the tax base (minimum income tax).
The regulations do not apply to taxpayers:
1) in the tax year in which they started their
business and in two consecutive tax years immediately following that tax year
(except for entities created as a result of restructuring),
2) which are financial corporations within the
meaning of Art. 15c of paragraph 1. 16 (financial enterprise),
3) if in the tax year their income was lower by
at least 30% in relation to the income obtained in the tax year directly
preceding that tax year,
4) with a "simple ownership
structure", ie those whose shareholders or partners are only natural
persons and if the taxpayer does not have shares (stocks) in the capital of
The tax base is the sum of:
➢ an amount corresponding to 4% of the value of revenues from a source of
revenues other than from capital gains achieved by the taxpayer in the tax year
➢ debt financing costs incurred on behalf of related entities in excess of 30% of the so-called tax EBITDA (similar to Art. 15c of the CIT Act - but without the exempt amount of PLN 3 million)
➢ purchase costs from related entities or from tax havens of certain services or intangible rights (existing Article 15e of the CIT Act - in the part exceeding PLN 3 million calculated according to the appropriate formula
➢ deferred income tax related to the disclosure of WNIP, resulting in an increase in gross profit or a decrease in gross losses.
When will we pay the tax?
We will settle the tax
in the annual declaration. It will be possible to reduce it by the amount of
CIT due under general rules. Moreover, the amount of the minimum income tax
paid can be deducted from CIT in the next 3 years (assuming, of course, that
the taxpayer's economic situation improves sufficiently).
Debt financing costs are not included in the
tax deductible costs: incl. interest on loans and other costs of debt financing
obtained from related entities (directly or indirectly), if the borrowed money
will be used for equity transactions, in particular for:
➢ acquisition or subscription of shares (stocks),
➢ acquisition of all rights and obligations in a partnership,
➢ payment of additional payments,
➢ an increase in the share capital, or
➢ buyout of own shares for
Tax deductible costs, costs related to the
provision of services, the beneficiary of which, directly or indirectly, is a
partner or entity related directly or indirectly with the taxpayer or with this
partner, shall not be included, if:
1) the amount of these costs or the date of
their incurring in any way depend on the profit made by the taxpayer or the
amount of profit or
2) a rationally operating taxpayer would not
incur such costs or could bear lower costs if a comparable service was
performed by an unrelated entity, or
3) these costs include remuneration for the
right to use the assets that were owned or jointly owned by the partner
(shareholder) or an entity related to the partner (shareholder) prior to the
creation of the taxpayer.
Points 2 and 3 shall not apply if the sum of the costs incurred in the tax year, constituting the hidden dividend on the basis of these provisions, is lower than the amount of gross profit within the meaning of the accounting regulations, obtained in the financial year in which these costs were taken into account. in the taxpayer's financial result
Liquidation of the statement on the preparation of price documentation as a separate document and transfer of the statement in the modified content to the information on transfer prices (TPR-C / TPR-P).
Making or accepting payments related to the conducted
business activity takes place via the entrepreneur's payment account, in each
➢ a party to the transaction from which the payment results is another entrepreneur and
➢ the one-off value of the transaction, regardless of the number of payments resulting therefrom, exceeds PLN 8,000 or its equivalent - Art. 19 of the draft Act - Entrepreneurs' Law.
Taxpayers do not
include the cost of obtaining revenue costs in that part, in which the payment
for the transaction referred to in article 1. 19 of the Act of March 6, 2018 -
1) was made
without the use of a payment account or
2) was made
by bank transfer to an account other than that entered into on the date of the
transfer order in the list of entities, the so-called "White List"
3) despite the words "split payment mechanism" being included in the invoice, it was made without the split payment mechanism
➢ R&D tax relief supporting conceptual work on a new product.
➢ Relief for a prototype supporting the transfer of an idea into the language of practice and production.
➢ Relief for supporting innovative employees, facilitating competition for specialists with key skills and competences.
➢ Discount for robotization, which will facilitate the opening of a production line dedicated to the product.
➢ Possibility of simultaneous use of R&D relief and IP Box relief,
reducing the burden at the stage of its sale
What expenses can be deducted?
Entities running a business will be required to keep accounting books,
tax records of revenues and expenses, and records of fixed assets and
intangible assets using computer programs.
-Monthly - tax books will be sent by the 20th day of the following
month, if the income is determined on the basis of the books and records, on
which monthly advances are made. (PIT)
- Quarterly - books will be sent by the 20th day of the month immediately following the end of the quarter, if the income is determined on the basis of the books and records, on which quarterly advances are made. (PIT)
-After the end of the year - the books will be sent by the deadline for submitting the tax return. (PIT and CIT)
The obligation to keep books and send them electronically will enter into force on 1 January 2023.
- the employer's income will be the remuneration of an illegally employed employee
- such remuneration and social security contributions will be excluded from the costs of obtaining revenues
- the employer will bear the costs of ZUS contributions for the employee
For the amount of the loss from the source of
income incurred in the tax year, the taxpayer may:
- reduce the income obtained from this source in the next 5 tax years, however the amount may not be reduced by more than 50% of the amount of this loss
-reduce one-off income by an amount not exceeding PLN 5 million, the underestimated amount is subject to settlement in the remaining years of this 5-year period, except that the amount
(i) if one of the taxpayers holds directly more than 50% of the share capital of the rest
(ii) the members' activities are of the same nature or are complementary and interdependent, or one of the members of the group carries out activities that the other members get profit from
(iii) by the law or actually they are under the same management or organize their activities in common agreement
Financially, economically and organisationally related entities will be able to form VAT groups. As a result of this change, transactions within the group will be tax neutral.
A new type of sales invoices will be issued using the template provided by the Ministry of Finance. Structured invoices will be considered issued on the day of their transmission to the National e-Invoice System.
a) In 2022 optionalb) From 01.2023 OBLIGATORY – it is necessary to adapt accounting systems to the requirements of issuing and sending structured invoices
New Polish Order 2022 – personal income tax changes from 2022
1. New amount reducing tax and tax threshold
2. No deduction of health insurance contribution
3. Tax Relief for the middle class
2021 legal status
Change New Polish Order 2022
PLN 8 000,00
PLN 30 000,00
up to PLN 120 000,00
health care contribution
health care contribution
7.75% deduction of health insurance from tax
No deduction of health insurance from tax
9% health premium calculated on income
The value of the health insurance contribution will be deducted from the net salary
no middle-class tax relief
PIT relief for the middle class: for people employed under a contract of employment with a monthly income from PLN 5.701,00 to PLN 11.141,00 gross
no discount for persons over PLN 11.141,00 gross
Ad 1 New amount that reduces tax and tax threshold
In 2021 the tax-free amount is PLN 8.000,00. In 2022 the new tax-reducing amount will increase
• from PLN 8.000,00 up to PLN 30.000,00 per year.
• from PLN 43,76 up to PLN 425,00 per month
The tax reduction amount is also to be
available to the taxpayers in the 2nd tax threshold, who will pay 32% tax.
Raising the tax threshold,
In 2021, it amounts to PLN 85,528. In 2022 the new tax thresholds will be as follows:
• the first tax threshold, i.e. 17%, will apply up to PLN 120.000,00 per year• the 2nd tax threshold, i.e. 32%, applies to the amount of income exceeding PLN 120,000 per year.
Income obtained by an employee, or a contractor
is exempt from collection of income tax advance up to PLN 85.528,00 for the
following 4 groups of employees:
taxpayer under the age of 26
taxpayer who in the tax year have at least four children (referred to in art.
27ea paragraph. 1 point 2 of the Act), exercised parental authority, acted as a
legal guardian, if the child lived with him, or performed the function of a
foster family on the basis of a court decision or an agreement concluded with
the starost, and in the case of adult learning children - he performed the
maintenance obligation imposed on him or her foster family function. Both the
mother and father of the children will benefit from the exemption.
taxpayer at the age of 60 for a woman and 65 for a man, and he/she is subject
to social insurance and not receiving a retirement pension or disability
taxpayer who transferred his place of residence from another country to the
territory of the Republic of Poland (in four consecutive tax years, counting
from the beginning of the year in which the taxpayer transferred his place of
residence, or from the beginning of the next year). This applies to selected
countries indicated in the act (belonging to the EU, EEA, Swiss Confederation,
but also in Australia, Japan, Canada, Great Britain or the USA), e.g. someone
who changed his place of residence to Poland in 2022 has the right to tax
exemption for 4 consecutive years. Exemption applies to people returning after
December 31st 2021.
In order to take advantage of the exemption in
points 2-4, a statement must be submitted, which will show that the employee is
entitled to this exemption.
Ad. 2 No deduction of health contributions
One of the most important changes is the
inability to deduct health insurance from tax. Currently, the contribution
payer could reduce the tax by 7,75% of the health insurance contribution base.
The New Polish Order will completely change the tax calculation mechanism, the
health insurance contribution will not be tax deductible
Ad. 3 Relief for the middle class
Relief for the middle class is another completely new solution that aims to protect the middle class from the effects of the introduced changes.
·In practice, if the employee earns monthly income from an employment contract from PLN 5.701,00 gross to PLN 11.141,00 gross, the tax remitter will be able to apply this relief to reduce the tax base.
if the employee achieves a gross income of less than PLN 68.412,00 gross or
more than PLN 133.692,00 gross, the tax credit is not due.
This means that the difference resulting from the middle-class allowance calculated in a given month will be required by the employee to return to the Tax Office together with the annual PIT settlement. The relief is settled on a monthly basis.
• The income of an Employee for 1 month is PLN 6.000,00, the calculated allowance for the middle class is PLN 119,41
• The annual revenue is PLN 134.000,00 gross -
the employee returns the amount of PLN 119,41 to the Tax Office
If the taxpayer submits a written application
for not reducing income by the amount of middle-class relief, the taxpayer does
not count the relief; the application is submitted separately for each tax year
and applies no later than the month following the month in which the employer
received the application.
1) If the employee resigns from calculating the allowance for the middle class, he will be able to settle any refund in an annual settlement with the Tax Office and receive the refund.
2) If, on the other hand, an event occurs where the employee is not entitled to a tax relief, because, for example, he will not earn such income, because he will lose his job during the year and will not receive the minimum threshold (68,412) or exceed (133,692), i.e. the income will be too high, he will have to return the previously calculated discount to the Tax Office at the end of the year.
Entrepreneurs or persons employed under civil
law contracts will not benefit from the relief for the middle class.
The new tax relief will also benefit authors and artists who apply 50% of their copyright tax-deductible costs
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