Poland: What Will the Polish Deal Mean for Organizations?

September 30, 2021
3 mins read
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The Polish Parliament is working on a draft act that will change personal income tax, corporate income tax, and others as part of the socio-economic program referred to as the Polish Deal. These new regulations will come into force in January 2022.

Here are some of the proposed changes.

Change of tax-free amount and tax threshold

The tax-free amount of PLN 30,000 will be introduced for all taxpayers who settle their income according to the progression. At present, the tax-free amount is progressively decreasing and no longer applies to individuals with an income above PLN 127,000 per year.

The 32% rate will apply to income over PLN 120,000 per year. Currently, it is PLN 85,528.

Change of the calculation basis for the health insurance contribution

The draft provides for significant changes in the amount of the health insurance contribution for self-employed persons, as it will depend on the selected method of taxation.

  • Entrepreneurs settling PIT in line with general principles

The health insurance contribution for entrepreneurs who settle accounts according to the tax scale is to amount to 9% of income. There will be no possibility of deducting the contribution from the tax.

  • Entrepreneurs taxed with a flat tax

The amount of the health insurance contribution for entrepreneurs settling to the flat tax will amount to 4.9% of income. However, it was stipulated that the health insurance contribution cannot be lower than 9% of the minimum wage.

  • Entrepreneurs taxed with a lump sum on recorded revenues

The health insurance contribution for entrepreneurs taxed with a lump sum on recorded revenues will depend on their average monthly remuneration and revenues.

  • Entrepreneurs taxed with a tax card

The amount of the health contribution for taxpayers settling on the basis of a tax card will be 9% of the minimum wage.

Abolition of the deduction of health insurance contribution from tax

At present, the health insurance contribution is primarily deducted from the income tax. As a result of the planned changes, the health insurance contribution will no longer be deducted from income tax. This is a systemic change and will affect all persons subject to paying contributions – employees, contractors, entrepreneurs, and pensioners.

 Tax relief for the middle class

The introduction of tax relief for people who earn income from a broadly understood employment relationship (business relationship, employment relationship, outwork, and cooperative work relationship). However, the relief will not be available to persons who earn income from civil law contracts, and activities performed in person. The relief is to apply only to persons whose income ranges from PLN 68,412 to PLN 133,692 per year (from PLN 5,700 to PLN 11,140 per month, respectively). This tax relief is intended to compensate for the loss caused by the abolition of deducting the health insurance contribution from tax.

 Health contribution on the remuneration of members of management boards and proxies

The proposed changes will mean an increase for persons performing functions based on an appointment for a compulsory health insurance contribution amounting to 9% of the basis for calculating the premium, which will be the amount of the remuneration collected. The entity paying the remuneration will be the person submitting the insurance claim and paying the contributions, i.e., the company. This contribution will not be deductible from income tax.

Change in taxation rules for the private use of a company car

New taxation rules for the private use of company cars have been defined. Electric cars and cars with an engine power of up to 60 kW will be taxed at a flat rate of PLN 250 per month. In the case of other cars, the tax will amount to PLN 400 per month.

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