Polish Deal introduced so-called relief to the PIT Act 1,500 PLN, which replaced the previous preferential taxation of income for single-parents (parent, guardian), which has been in existence almost since the beginning of the PIT Act.
Relief 1,500 PLN, As a tax deduction, it was intended to ensure that those who use it as a single parent do not lose their child compared to the previous solution. However, this did not happen – it turned out that replacing preferential income taxation with a relief 1,500 PLN is definitely less tax-friendly.
Preferential taxation of income for a single parent consists of a double tax on half of the income of the single parent. With this method of calculating the tax, the tax-free amount is implemented twice, similarly to the joint taxation of spouses.
In addition, given the significant increase in the tax-free amount introduced Polish Deal 1.0 (30,000 PLN), preferential tax treatment compared to relief 1,500 PLN is an even more beneficial solution for single children than the previous preference. This was an earlier solution that had been in operation for many years.
However, it should be stressed that this mechanism was to be fully restored in this form only in the case of children with a disability. This is what Project looked like. Polish Deal 2.0 of 12 May 2022
In the Parliamentary Project of the Day 12 May 2022, for other children, the parent could only account for half of his child; i.e. calculate the tax on the tax base divided by 1.5, and then multiply it by 1.5.
As a result, parents of children with no established disability would benefit de facto from 1.5-times the standard free amount, i.e. 45,000 PLN. However, in the project of 9 June 2022 The Senate introduced an amendment adopted by the Sejm, which restores the principle of double (the former preference to the full range).
Position of the Ombudsman
The Ombudsman stressed that citizens were disappointed for the above reasons, as they expressed themselves in new complaints addressed to the RPO. They claimed that the legislator had actually taken action to restore half the relief.
Moreover, they stressed that the project was not subject to public consultation and that the change proved to be far less beneficial for single-parents. The Ombudsman argued that the legislator once again at the last minute surprised taxpayers with a modification of the rules.
In a government project dated 12 April 2022 There have been regulations on the calculation of the double tax.
In the subject, the Ombudsman noted: “No consultation was made. This proves that it is carried out in a great hurry, without adequate analysis and assessment of the effects of the regulation. The RPO pointed this out while working on "Polish Deal". In his speech to the Marshal of the Senate, he stressed the legitimacy of leaving the solutions to date for single children."
Since its entry into force Act dated 29 October 2021 amending the Personal Income Tax Act, the Corporate Income Tax Act and certain other laws (i.e. original version Polish Deal) demands were made to restore the possibility of using this method of taxation.
The Ministry of Finance, and further in particular the RPO and the Senate, supported the voices of the public space.
After the entry into force of the Act Polish Deal 2.0, taxpayers will be able to make declarations to payers of their intention to benefit from preferential income taxation, which will allow the additional amount free already during the year to be realised.
Senate position
In addition, the Senate also intended to leave the possibility of deducting 1,500 PLN tax on 2022 arguing this with the derived from Article 2 The Constitution prohibits the taxpayer from making tax changes detrimental to the tax year.
According to Article 2 Constitution (the so-called triune principle), The Republic of Poland is a democratic legal state that implements the principles of social justice.
This general principle derives from, inter alia, the principle of the protection of trust in the State and the right it provides that it is not permissible to modify the tax burden of nan during the tax year in respect of taxes paid over the annual cycle and statutory amendments to personal income tax should be published at least one month before the end of the previous tax year, i.e.
up to day 30 November.
The principle that changes in income tax should be adopted at least one month before the start of the tax year derives from the case law of the Constitutional Court. TK ruled that for a time first 15 March 1995 in the judgment of reference no. K 1/95. The Court stated that the month is ‘the final date after which changes that may affect the amount of tax in the coming tax year can no longer be made’.
On the other hand, the Ministry of Finance points out that ‘prohibits and orders derived from the principles of a democratic rule of law (Article 2 the Constitution) is not absolute.’ They may be waived when there is an important public interest in this, but such a derogation must be exceptional, e.g. by the legislator to oppose fraud and fraud resulting in tax evasion.
The Senate therefore called for the addition of a special transitional provision. Under this regulation, a single parent would be entitled to a tax deduction at his request. However, the amendment was rejected by the Sejm.
As expressed by the RPO (in the so-called student relief case – letter dated 12 April 2022 reference no. V.511.603.2022.KB) withdrawal from the principle of acquired rights is only allowed under specific circumstances, and therefore where there is a different constitutional principle (judgment of the Constitutional Tribunal of 22 June 1999, reference no. K 5/99). The law obtained by taxpayers should therefore not be taken or adversely modified.
Further doubts
In addition, we should mention the interpretation doubts that raise the new Article 6(4f) the PIT Act, which deals with the concept of a common upbringing of a child from another parent, which may cause significant practical problems, in particular as regards proceedings to determine whether the taxpayer was entitled to use such a method of accounting. In practice, situations when a child is in contact with another parent who, however, does not in any way support him.
The Senate introduced an amendment liberalising this provision, which passed through the Sejm, but was not in the final shape of the bill Polish Deal 2.0 of 9 June 2022 According to the Senate’s justification: “It is not necessary to do so second from his parents at the time he was completely eliminated from the care and upbringing of children, as such a condition would contradict the state's pro-family policy, aimed at systematically supporting parents in raising children, especially in their single upbringing. Single parenting of children throughout the tax year as defined by the tax authority could only be carried out for widows, widowers and divorced persons granted sole parental authority.’
The changes implemented should be assessed as positive. However, it is not difficult to get the impression that they were introduced under the influence of social sentiments.
It should also be stressed that the government tried to limit this relief, while thanks to the actions of the RPO and the Senate, it was restored to the same extent that it had been in force before 1 January 2022 i.e. before introduction first version Polish Deal.
A fundamental change is, of course, to increase the amount available to 30,000 PLN, of which a single parent can benefit in double height (60,000 PLN).
Author: Mateusz Krawczyński, junior tax consultant in Russell Bedford Poland. Graduated from bachelor's degree in Logistics and Master's degree in Finance and Accounting. He is currently studying the Law at Lazarski University. Previous professional experience in tax matters gained in one of the so-called Big Four companies. He specializes in tax on goods and services, in particular with regard to VAT settlements in local government units.