Below we present the most important changes to be introduced within the Polish Governance for individuals.
- Unification of the health insurance rate to 9% on actual income derived, elimination of the possibility of deducting health insurance contributions from PIT:
- contributions for individuals carrying out individual business activity will still amount to 9%, but as of now actually derived income, not less than minimum wage in the Polish economy, decreased with social security contributions -> end of the lump sum contributions: currently health contribution amounts to PLN 350 monthly, most of which is tax-deductible;
- for individuals applying lump-sum taxation on business income, the contribution will amount to 1/3 of the lump sum and the basis will be income decreased with social security contributions;
- it will not be possible any longer to deduct health insurance contribution from tax - so far it was deductible in 86.11%;
- board members who perform their functions solely on the basis of appointment/resolution of shareholders will be obliged to pay 9% of the health insurance contribution – currently, they are not subject to health insurance at all.
- Introduction of tax exemption for capital gains derived from the sale of shares acquired within the initial public offering by an individual or his/her testator, if it occurs after 3 years from the IPO and the taxpayer or the testator were not related to the issuing company;
- Additional preferences for taxpayers investing in alternative investment companies (ASI):
- possibility of additional deduction from the tax base 50% of expenses borne on the acquisition of shares of an alternative investment company (ASI), or a company in which ASI holds at least 5% of shares, provided that such shares are held for the period of at least 2 years;
- the deduction cannot exceed the amount of PLN 250k in a tax year.
- Lump-sum taxation for individuals coming back to Poland:
- applicable only for individuals transferring their tax residency back to Poland;
- a taxpayer who chooses taxation under the new rules will be obliged to pay a flat-rate tax (PLN 200k) for each tax year, regardless of the actual amount of income derived by the taxpayer on revenues obtained from sources abroad, without the need to declare the sources of these revenues, the amount of income and the country where it was obtained in the annual PIT return;
- Conditions that need to be met:
- the taxpayer, in the period preceding the tax year in which he transfers his tax residence to Poland, has not been a Polish tax resident for at least 5 out of 6 tax years;
- the taxpayer has to incur annual expenses for economic growth, development of science and education, protection of cultural heritage or promotion of physical culture, in the total amount of at least PLN 100k per year,
- the taxpayer will be able to use the preferential method of taxation for a period of 10 tax years.
- Unification of taxation rules for rental income for individuals not conducting business activity – solely lump-sum taxation (8.5% up to PLN 100,000 and 12.5% on the excess) will be applicable.
- Reduction of lump-sum taxation rates:
- 14% for medical professionals, i.e. doctors, dentists, veterinarians, dental technicians, feldshers, midwives, nurses, psychologists, physiotherapists, and technical professions, i.e. architects, construction engineers, construction experts;
- 14% for revenues from architectural and engineering services, technical research and analysis services, and specialist design;
- 12% for revenues related to the provision of certain IT services.
- Relief for return to Poland:
- additional tax deduction in the annual settlement;
- in the first year: 50% of the tax due for the "base year" (the year in which the taxpayer changed tax residence), in the second year - 50% of the tax due for the first year of applying the tax relief, in the third and fourth year - 50% of the output tax calculated for the previous year of applying the relief, that is, for the second and third years of applying the deduction, respectively.
- the condition for the deduction will be remaining a Polish tax resident,
- the relief applies to taxpayers who moved their place of residence to Poland after 31 December 2020.
- (i) Increase of tax-free amount to PLN 30k all taxpayers subject to progressive taxation and (ii) increase of PIT threshold (for 32% PIT rate) to PLN 120k.
- The so-called "Relief for the middle class":
- Additional income deduction of a specific amount; the amount will depend on the level of the annual revenue of employees, remaining in the range from PLN 68,412 to PLN 133,692;
- relief will be available also for taxpayers personally obliged to calculate PIT advances, e.g. employees carrying out their duties under the foreign employment contract.
- Transitional income tax on certain undisclosed income:
- for taxpayers who obtained income not declared, fully or partially, for taxation in Poland or who have not correctly fulfilled their obligation to collect tax (tax remitters);
- taxation with 8% transitional income tax will be voluntary - taxpayers and payers will be able to assess their legal and tax situation until the end of 2022 and decide on potential disclosure of income,
- application for temporary taxation will be subject to a lump sum fee amounting to 1% of the undisclosed income - not lower than PLN 1,000 and not higher than PLN 30,000,
- the new rules apply to revenues earned until 31 December 2022.
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