Many teachers wonder how to tax online tutoring revenues. We will find the the answer to that question in one of the latest requests for an individual interpretation interpretation.
In the era of the pandemic, teachers were forced to depart from the current form of teaching with students. In this situation, the most advantageous was the introduction of online lessons using a computer and the Internet. Some teachers decided to go a step further and tutor in the same way, taking advantage of the time they usually spent to get to work. The Director's most recent interpretation concerns personal income tax in terms of the way tutoring is taxed.
The revenues obtained from the provision of tutoring constitute revenues from the activities performed in person. Online tutors should tax their income on a general tax scale, reducing revenue by 20% costs of obtaining it
The facts presented show that the applicant signed a contract with a Singaporen company, in which she was to tutor English online. The company with which the woman signed the contract is to mediate between students and teachers and provide the platform created to provide tutoring.
The applicant pointed out that the company would not set the working hours of the company, and that a timetable would be available on the platform in which it would be able to determine its availability at any time. The only requirement will be that she carry out one lesson within 90 days for the contract to remain in force.
That's why it can happen that in one month the applicant will teach a lot of lessons, and at all. The woman also indicated that the company was to pay her salary for the lessons performed after the settlement periods ended, i.e. 20-for each month, for a period from 11-the previous month until 10-of the current month.
Payment is to be made in USD currency to the payment service account. The applicant pointed out that it has no registered business activity and that its place of residence is Poland.
Moreover, the woman is employed on the basis of a full-time employment contract, and the online tutoring described here will only be an extra activity, where the income from these classes should not exceed several hundred PLN per month.
Therefore, in determining the source of income, the applicant considered that it should be classified as an activity carried out in person (educational activity) and thus should be taxed.
The Director of KIS agreed, stating that the granting of online tutoring by a Polish tax resident on the basis of an agreement concluded with a Singaporean company is subject to taxation in the light of tax rules in Poland.
Consequently, since the circumstances set out in the application showed that the activity undertaken by the applicant would be educational activity and would not be organised or continuous in nature, the revenue obtained from it should be classified as the source of revenue indicated under Article 10(1)(2) Act dated 26 July 1991 on income tax on individuals (Journal of Laws of 2019, item 1387 t.j.
of day 25 July 2019) (Next: PIT Act) i.e. activities performed in person. He pointed out that under the provisions of the PIT Act, taxpayers who obtain income from their personal educational activities are obliged to pay income tax advances to the tax office to 20 each month after the month in which the income was obtained (i.e.
the transfer), and advances should be settled after the year ended in PIT-36, applying to the income received the lowest tax rate determined on the scale referred to under Article 27 PIT Act. Where income is considered to have been generated during the month after deduction of the monthly cost of obtaining it, i.e.
height 20% specified under Article 22(9)(4) PIT laws and contributions paid during the month concerned under Article 26 the above Act.
The income generated in foreign exchange values should be converted using the average rate announced by the National Bank of Poland on the last working day preceding the day of receipt of the transfer in the payment service.
In conclusion, the revenue generated by the provision of tutoring constitutes revenue from the activities carried out in person. Online tutors should tax their income on a general tax scale, reducing revenue by 20% the cost of obtaining it.
Advances on income tax should be paid to the tax office to 20 each month after the month in which the income was obtained and for December at the time of the tax return.
It should be borne in mind that after the end of the tax year, it is compulsory to submit a recognition of the amount of income earned (loss incurred) in the tax year by the deadline until 30 April.
On the basis of an individual interpretation of the date 13 March 2020, No 0112-KDIL2-1.4011.74.2020.2.JK
Author: Paweł Boś
Junior Tax Consultant, related to Russell Bedford Poland 2018. Author of numerous articles on legal and tax matters, published in the industry press. Law student at Leon Kozminski Academy in Warsaw.