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Polish Deal: compulsory health contribution to the management board

The consultation on the introduction of the so-called "studies" is slowly coming to an end.

The consultation on the introduction of the so-called "studies" is slowly coming to an end.

Polish Deal – the largest tax reform of recent years.

The draft legislation is intended to seal the tax system,

The consultation on the introduction of the so-called ‘strategy’ is slowly coming to an end. Polish Deal – the largest tax reform of recent years. The draft rules are intended to seal the tax system, offset social inequalities and support entrepreneurs. The last point unfortunately will probably remain in the scope of the assumptions, because the records Polish Deal de facto burden entrepreneurs.

The planned changes provide for a redistribution of the tax burden, resulting in a reduction of the tax burden for one and their growth for others. Unfortunately, a significant part of the increases will include entrepreneurs. It's been pretty loud lately about mandatory introduction.

9% a health contribution calculated proportionally on income for self-employed persons. Another system noveum is the decision to include mandatory 9% the health contribution of members and CEOs of company boards. In practice, this means increasing their tax and social burden from 32 to 41%.

Currently, acting as a board member or CEO is not a title to social and health insurance. This will be amended if entry into force Article 13 Project dated 26 July 2021 amending the Personal Income Tax Act, the Corporate Income Tax Act and other laws:

„Article 13. In the Act dated 27 August 2004 on public-funded healthcare services (Journal of Laws of 2020, item 1398, as amended) is amended as follows:
  1. Under Article 66 Under section 1 rod point 35 the following is added: point 35a the following:‘35 (a) persons appointed to serve under the appointment act, who shall be remunerated accordingly;’[1]

As a result of this amendment, the obligation to pay by persons employed on the basis of appointment 9% the health contribution to be charged in proportion to the income. Consequently, the heads of companies will earn less by 9%, and their socio-tax burden will increase to 41%.  Experts estimate that changes can affect around 80% Companies across the country, the most severe change will be for small and medium-sized companies, as they most often employ managers on the basis of appointments.

The planned changes are to enter into force from 1 January 2022

[1] https://legislacja.rcl.gov.pl/docs//2/12349409/12805432/12805433/dokument514512.pdf

Author: Darya Bannaya

Younger tax consultant. Graduate of Law at the Faculty of Law and Administration of the University of Warsaw, graduate of Global Business, Finance and Management in Warsaw School of Economics. He specializes in tax law, advising clients on current matters relating primarily to income taxes.

Author and co-author of a tax law publication.

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