7 changes in the Polish Deal that are important for the IT specialists
The Polish Deal is to be changed. Following public consultations, the government has modified the proposed changes to the tax legislation to take effect from July, 1st. The most important of them include the possibility for companies to change the form of taxation in the middle of the year, lowering of the first tax threshold to 12% and elimination of the middle class relief.
The government argues the modifications with high inflation, potential crisis due to the war in Ukraine and the need to change the assumptions of the Polish Order, which proved to be ineffective.
Tax proposals included in the draft that may be relevant to IT professionals are:
- Reduction of the PIT rate to 12% from 17% in the 1st bracket of the tax scale. The remaining elements of the scale, i.e. the tax rate after exceeding the threshold of 32%, the free amount (PLN 30,000) and the limit of the first tax bracket (PLN 120,000) remain unchanged.
- Possibility of deducting health care contributions for entrepreneurs settling a flat tax and a lump sum on registered income. These entrepreneurs will be able to deduct health contributions according to the following rules:
- flat tax – possible reduction of income up to the limit of PLN 8.7 thousand;
- lump-sum tax – income may be reduced by 50% of the health premiums paid.
- Elimination of the middle class relief – it will not be applied to income earned from 1 January 2022. Individuals for whom settling with the middle class relief proves more profitable than settling in accordance with the new mechanism will be able to settle their tax for 2022 in accordance with earlier rules (this is provided for in transitional regulations).
- The possibility of choosing taxation according to the tax scale by those entrepreneurs who at the beginning of 2022 chose a flat tax or a lump sum. Entrepreneurs on a flat tax will be able to opt for it after the end of the tax year, by filing PIT-36 instead of PIT-36L. Lump sum taxpayers, on the other hand, will be able to do so after the end of the year by filing PIT-36 instead of PIT-28, or during the tax year, until August 22, 2022 by filing an opt-out statement. In the latter case, they will pay PIT on a general basis for half of the tax year and will therefore file two annual returns – both PIT-36 and PIT-28.
- Unification of the deadline for all annual PIT settlements – by April 30th (previously it was the end of February for lump-sum settlements).
- Introduction of new rules of applying the tax-free amount to PIT advance payments, effective from 1 January 2023. Persons who receive income from several sources will be able to authorise up to 3 payers (e.g. employers, principals, Social Insurance Institution) to reduce their PIT advances by the tax-free amount (now the tax-free amount may be applied by one payer only).
- Restoring the possibility of joint settlement with a child in case of single parents.
The analysis of changes was prepared for Awareson by Ewa Szkolnicka-Górecka from ITA Doradztwo Podatkowe.