Polish Deal – 9 most important changes
October 12, 2021
From January 1, 2022, the so-called “Polish Deal” (“Polski Ład”) is to come into force. The bill submitted to the Sejm introduces a number of changes for taxpayers and entrepreneurs. Since the bill has already been voted through in the Sejm and on October 4 it was handed over to the President and Marshal of the Senate, we started analysis of this several-hundred-page bill. From now on, we will successively provide information on the most important changes that will affect your life due to the “Polish Deal”.
1. Increase in the health insurance contribution
The first important and most emotional change is an increase in the health insurance contribution. Entrepreneurs:
- settling PIT on general principles will pay a contribution of 9%,
- taxed with a flat PIT tax – 4.9%,
- taxed with a lump sum – will pay a contribution which will depend on their income,
- taxed with a tax card will pay 9% of the minimum salary.
A possibility of deducting health insurance contribution from income tax will be abolished, which means an increase in the calculation base by 7.75% for all entrepreneurs paying the contribution. The deadline for settling health and social contributions will also change. It will be standardized and extended to the 20th day of the month.
2. Increase of the tax-free allowance
Another change is an increase of the tax-free allowance to PLN 30,000 and an increase of the tax threshold from 85 thousand PLN up to 120 thousand PLN. However, the changes concerning the tax-free amount do not apply to entrepreneurs taxed with the linear 19% tax rate. A new tax scale will apply, consisting of two thresholds: 17% to 120 thousand PLN and 32% above 120 thousand zloty.
3. Tax allowance for the middle class
The bill also provides for an introduction of a middle class allowance for people whose annual income is between PLN 68,412 and PLN 133,692. The amount of the allowance will be calculated according to a formula specified in the regulations and will depend on the earnings.
4. Company cars
Changes will also apply to company cars and a lump sum. The engine power will be taken into account, not its capacity so far. The lump sum for cars up to 60 kW will be PLN 250, and for cars above 60 kW – PLN 400.
5. Lease buyout
From January 2022, an entrepreneur who wants to buy a car and then transfer it to private property will have to pay income tax and VAT. However, the principle of charging VAT on a purchased car will change. VAT will not be charged from the last loan installment, the so-called buyout installment (usually 1%), but on the real value of the vehicle. The new regulations also extend the period, in which sale of a car is subject to tax, from 6 months to 5 years.
Are you searching for more details about the “Polish Deal”? Find some useful links below (only Polish available!):
- Bill (draft act) amending the act on personal income tax, the act on corporate income tax and some other acts
- At what stage are the works on the “Polish Deal” currently?
- Coverage of the “Polish Deal” on the government website
6. “Tax relief for return”
“Tax relief for return” will be available to people who previously did not have a tax domicile in Poland for at least 3 years and decided to transfer their tax residence to Poland. It will be possible only under certain conditions. Taxpayers will be able to take advantage of the exemption for 4 consecutive years.
7. Tax residence
A change will also apply to the tax residence. A foreign company whose current affairs will be conducted in an organized and continuous manner on the territory of Poland may become a Polish resident. It will be possible to use copies of tax residence certificates, as long as they do not raise any doubts as to their compliance with the original.
8. Buildings and residential premises vs. depreciation
An announced change includes an exclusion from tax costs of depreciation allowance for buildings and residential premises and the prohibition of depreciation of residential premises.
9. Additional tax for large corporations
A new income tax for large corporations will be introduced. It will amount to 0.4% of company revenues + 10% of excess costs. These will affect capital companies and tax capital groups that show a loss in annual statements or where the share of revenues in income is 1% or less.
A real revolution awaits Polish taxpayers next year. Only a few of the numerous changes to be introduced in the Polish Deal have been mentioned above, and there is little time to prepare for them. We recommend following our social media to be up to date with news about the “Polish Deal”. All analyzes are conducted under the supervision of specialists.
Author: Klaudia Gruchalska, Junior Accountant
