On 24 March 2022 The MF announced significant changes in income tax on individuals. The most important changes indicated, among others, the reduction in the PIT rate from 17% to 12% and exclusion of the contribution to health insurance from the tax base for taxpayers on liner tax, lump sum and tax card.
In accordance with the proposal, solutions are to be repealed Polish Deal, which are ‘unfavourably received by taxpayers’ (citation to the draft law), including:
- 1) elimination of the so-called middle class relief and monument relief,
- 2) amendment of the rules on the application of the tax-free amount (i.e. 1/12 the tax reduction amount,
- 3) exemption of the payer from the obligation to collect an advance on tax,
- 4) a change in the income criterion of an adult learning child under the right of parent or guardian to tax preferences,
- 5) amending the directory of income of the minor child, which includes the income of the parent,
- 6) changes in the exemptions concerned,
- 7) allowing a defined group of taxpayers to transfer amounts of 1% the tax due to the public benefit organisation on the basis of the application for the previous tax year,
- 8) repeal of the extension mechanism and payment of advance payments on income tax in progress 2022
On the same day, a draft law amending tax laws was published on the RCL pages and consultations were launched to take place until 2 April 2022 This means that the consultation is planned 9 days, which is quite curiosity in the context of a statement expressed by the authors of the project, which reads: "We hope that the project will be developed in a social consensus".
This also means that reading the project must be done immediately, which we do and share with you first observations. The vast majority of the changes planned for the project are expected to enter into force from 1 July 2022
Change in the tax scale
Reduction of the lowest tax rate from 17% to 12% is intended to apply to all taxpayers accounting for the tax scale, regardless of the source of income (in this respect also entrepreneurs). This amendment is intended to compensate for the repeal of the relief for the middle class, which causes difficulties in application.
The amendment means the fixing of a new tax reduction amount, which will be 3,600 PLN and is intended to produce effects from the moment of entry into force by enabling advances to be collected at a reduced rate. Although the bill is to enter into force 1 July 2022 rate 12% is to apply to the annual accounts for the whole 2022
This change will certainly not compensate for the new rules on the establishment of the health contribution for those applying the tax scale, which from 1 January 2022 increased drastically from flat-rate, relatively small amounts to 9% basic.
The proposal also proposes a solution that, when tax due for 2022 will be higher than the hypothetical tax due for 2022, the competent head of the tax office shall reimburse the taxpayer for that difference. In practice, this means that if a tax calculated on new rules is higher than a hypothetical tax, the taxpayer will not lose financially because it will be settled on more favourable rules.
Opportunity for deduction of the health insurance contribution paid by the taxpayer
The taxable persons accounting for a linear tax, whose change in the lowest threshold on a scale does not contribute, will be entitled to deduct from the basis of the calculation of the tax (income) or credit for the cost of obtaining the income paid for the health contribution related to the activity.
The possibility of deduction is limited – the annual limit is to be 2022 8,700 PLN.
This is the amount of the deduction on income and not on tax, which means that, after the mathematical calculation of these values, the taxpayer accounting for a linear tax 19% will benefit from this change of maximum tax savings in the amount 1,653 PLN (for the whole year).
The flat-raters will deduct half of the health contribution (also paid for co-operating persons) from income. Tax payers will reduce tax by 19% contributions.
Removal of relief for monuments
Project assumes complete resignation on 1 January 2023 from a preference called "Palace Plus" by commentators. As a justification, authors point to the general public's lack of justification for such a relief, which usually concerns wealthy taxpayers investing in monuments.
It's kind of a shame about all the tenements that were supposed to be renovated. The consolation was that these expenses, which could have been deducted on the basis of acquired rights, could be deducted before the entry into force of the new rules and would not have to be reimbursed.
It seems that the opposite would be inconsistent with the Constitution, so the act of grace does not occur here, but it is always a consolation and a chance that this year 2022 still some renovations with preferences.
Amendments to the rules on the application of the tax-free amount
The payers shall take into account the tax-free amount by reducing the advance on the tax by an appropriate part of the free amount (in the case of monthly payments by 1/12) i.e. currently 5,100 PLN, after change 3,600 PLN A year.
In the current reduction system, it can only do one the payer, therefore, where the taxpayer obtains income from different payers, the reduction may apply only to one pay. According to the proposed amendment, the taxpayer will be able to indicate to third payers who will include a reduction in payouts.
However, this does not mean that the free amounts are ‘summing up’ and that the taxpayer will ultimately be saved more.
He will simply be entitled to have his amount free and will be able to, for example, 1/12 to 3,600 PLN, or 300 PLN per month divided by 3 payers, for example 3 x 100 PLN, so that each of the payers takes into account the down payment.
In the annual clearance, the taxpayer will not feel the difference except that in some cases there will be no basis for the reimbursement of the excess tax as the reduction amount will already be included in the advance.
Exemption from the obligation to collect advances
The new solution is to allow the payer to apply for no advance payments, but only if the taxpayer provides that his income does not exceed the tax-free amount. 30,000 PLN. The taxpayer should immediately withdraw his application if he realises that he can earn more.
However, given that applying the tax reduction amount correctly, which is the result of the inclusion of the tax-free amount in the advance payments, the revenue below 30,000 PLN the advances due should not occur with minor exceptions (e.g. a significant disparity in income between payments for subsequent months).
The mathematical effect of taxation on this preference is also 0. Expected interest in preference little more.
Restoring the mechanism of common accountability with the child in the case of single parents
The new regulations are intended to restore the possibility for single parents to account for their children. Common settlement will replace a relief for single parents of 1,500 PLN, which has been introduced by legislation Polish Deal and replaced the option to settle with the child. In this way, single parents will benefit twice from the free amount 30,000 PLN.
Longer term for JPK PIT and CIT
The project also changes the deadline for the transfer of JPK CIT and JPK PIT accounts. The new deadline for the transfer of JPK in the field of accounts was dependent on the taxpayer's status:
Largest taxpayers with income exceeding 50,000,000 EUR they will be required to keep accounts using computer programs to send them in structured form from the start 2024
for taxable persons keeping VAT records from the start 2025
for other taxable persons, from the outset 2026.
Changes in social and health insurance
The project's authors predicted a number of changes to the Health Benefits Act, which they described as "defining changes". In this context, it is particularly worth to return to changes in the health contribution for prosecutors and limited-activity companies.
Duty of health insurance for prosecutors.
In the case of prosecutors, there were doubts as to whether they belonged to persons appointed under the appointment act, as referred to under Article 66(1)(35a) The health benefits bill, so the project's authors decided to remove these doubts by clearly identifying the prosecutors in the wording of this provision. Thus the doubt will be removed, the change is to apply from 1 July 2023
Social and Health Insurance Obligation for Complementaries of limited liability companies
In the current state of the law, in the case of complimentaries in limited-activity companies, there is hardly any doubt: they are not indicated in the circle of persons covered by the social and health insurance obligation, so having a subsidiary status in the SKA means not having to pay contributions to these insurances.
The project's authors also decided to address this issue and proposed to change both Article 8(6) Act on the social security system by identifying a new category of ‘complementary in a limited partnership’ and Article 82(5) Health benefits act by identifying a new category of activity: ‘economic activity carried out in the form of a limited partnership by a subsidiary’.
Such a change will mean full coverage of SKA's subcontractors, which is to enter into force from 1 January 2023 If that is the case, then all transformations into limited-liability companies that took place at the end of the year Directive 2021/2022 will be beneficial in terms of social and health contributions for complementary partners only in annual settlement 2022.