In line with the government's announcements, the Solidarity Fund for the Support of Persons with Disabilities Act will introduce a solidarity tax which will affect the "richest" citizens and, to a large extent, entrepreneurs conducting single-person economic activities.
As a result, many questions arise, and one of the most important is what will the government do if the people charged with the tax start to massively transform their business into a capital company or take other restructuring measures for their businesses? Where does the government get the money then?
It may be that from the pockets of other taxpayers, since part of the Fund's funds already in the establishment of the Act will come from part of the Labour Fund contribution of all insured persons.
There is no doubt that the ‘solidarity objective’ to be implemented in accordance with the project dated 12 July 2018 The Solidarity Fund for the Support of Persons with Disabilities (hereinafter ‘the Act’), is nothing more than another tax levied de facto on the most profitable group of taxpayers – individuals and on the website of the Ministry of Finance https://www.mf.gov.pl/ministerstwo-finansow/dla-mediow/informacje-prasowe/asset_publisher/6PxF/content/id/6388333 is clearly indicated that the revenue from the following statements will be taxed on the solidarity tribute:
- • PIT-37 – national income from: labour, pensions, pensions, contract orders, works contracts, property rights (taxed on a tax scale),
- • PIT-36 – domestic and foreign income from: business, rental, work, pensions, contract contracts, works contracts, property rights (taxed on a tax scale),
- • PIT-36L – business income (taxed by the so-called liner tax),
- • PIT-38 – income from capital gains, e.g. from the sale of securities and derivatives of financial instruments (single taxation) 19% Rate),
- • PIT-40A – income from pensions (taxed on a tax scale and settled by pension authorities, e.g. ZUS.
Escape From New Tax
Under the new rule Article 30h(1) Personal Income Tax Act: ‘Natural persons who have obtained income in the tax year above the amount 1,000,000 PLN, are obliged to pay a solidarity tax for a tax year of 4% above that amount.’ The method of calculating the solidarity tax is as follows:
It is estimated that the new tax will pay around 21,000 the wealthiest citizens – this is the number of people whose annual income exceeded one million Gold. In 2019 It may even be 25,000 people. The vast majority of them (17.3%) are persons engaged in a single-person business which settles according to a linear 19% tax rates.
As we have written many times on our pages, one-man economic activity is not an optimal form of conducting business, and the introduction of the solidarity tax really hits Polish entrepreneurs (and not so stigmatized by foreign government companies).
While many entrepreneurs are concerned about taxing income at company level and then at shareholder level, there are certain mechanisms to ensure that the company's management policy is sufficiently optimal that these concerns are not justified.
A solidarity Denmark can be an important impetus for entrepreneurs to consider whether or not it is worth turning a single-person business into a capital company.
Shortcuts
However, when going back to the draft Act, it should be pointed out that, of course, its objectives in the form of a "Fund" for the social and professional support of persons with disabilities are right and desirable.
However, aversion and doubt relate to the sources of funding, the most important being the compulsory contributions to the Fund and the solidarity tax referred to in Chapter 6a Act dated 26 July 1991 on personal income tax (Journal of Laws of 2018, item 200, ).
The annual budget from these sources has been calculated to be around 2,000,000,000 PLN. The largest part of this amount will be the solidarity tax of around 1,150,000,000 PLN, approximately 650,000,000 PLN will come from the Labour Fund.
Namely from the Labour Fund contribution of each insured citizen, which amounts to 2.45% the basis of insurance, 0.15% will be transferred to the Fund. This is a fairly specific design in which one The Fund (Works) shall be transferred to another purpose, i.e. Fund for social and occupational support of disabled people.
The government considered that in a situation of low unemployment it could reach into the pockets of taxpayers on two methods: through the solidarity tax and through part of the contribution to the Labour Fund of persons insured in ZUS. It is not true, therefore, that aid for the disabled will only be financed by the wealthiest.
Furthermore, it should be noted that if the state budget lacks money to finance further social benefits, which we generally consider justified, unjustified and costly tax, pension and pension privileges for various social groups, spending on various government agencies and managing public funds more efficiently. However, it is clear from the actions of the government covered by the Act that no effort has been made to find savings in the budget, but the simplest solution - simply in the pockets of citizens.
Author:
Aleksandra Księżyk
Director of the Legal Department in Warsaw. Legal advisor, from 2013 associated with Russell Bedford. He runs the Legal Department at the Chancellery Russell Bedford.