Poland: Possible amendments to tax measures in “Polish Deal”

Expected to come into effect on 1 July 2022

Expected to come into effect on 1 July 2022

Possible amendments to the tax-related measures in the “Polish Deal” were announced on 24 March 2022 and are expected to be effective 1 July 2022.

The Polish Deal refers to legislation amending the income tax laws affecting corporations and individuals, as well as the value added tax (VAT) and other tax legislation, which was passed on 29 October 2021 and is generally effective as of 1 January 2022. Read TaxNewsFlash

The possible amendments include:

  • Reduction in the rate for the first individual (personal) income tax bracket to 12% (from 17%).
  • Reduction in the taxable base of remitted health insurance contributions (up to a certain limit) for individuals obtaining revenue through business activity subject to flat tax, fixed-amount tax or lump-sum tax on recorded revenue. The annual deduction cap for flat taxpayers is to be set at PLN 8,700, at 50% of the amount of contributions paid for lump-sum taxpayers, and at 19% of the premiums remitted by fixed-amount taxpayers (in form of a tax reduction).
  • Elimination of the middle-class relief, with a reservation that taxpayers would still be able to settle the tax for 2022 according to the previously applied rules (i.e., using the middle-class relief), if it proves more favorable for them.
  • Restoration of the possibility of filing a “joint settlement” by single parents and their children, meaning that single parents can use the tax-free allowance of PLN 30,000 twice. Joint settlements are to replace the PLN 1,500 relief introduced on 1 January 2022.
  • Increase in the earnings threshold that a child can achieve without losing tax preferences by parents, to PLN 16,061.28 in 2022 (from PLN 3,089).
  • Exclusion from income for family pensions for parents of minor children. This means that a child would be treated as a separate taxpayer and enjoy the tax-free allowance of PLN 30,000, just like the parent.
  • Proposal to extend tax relief (tax relief for young taxpayers, return relief, relief for “4+ families” and relief for working seniors) to statutory maternity pays granted to parents and guardians of fostered children, meaning that no tax would be collected on such pay (up to the limit set for the above-mentioned relief).
  • Extension of deadline for submitting certain corporate income tax and individual income tax forms (returns) until 2025.
  • Revocation starting from 2023 of monument relief and lump-sum tax on untaxed income (commonly referred to as “tax abolition”) measures.

An extensive consultation process was launched on 24 March 2022 and will continue to 2 April 2022. 

Read a March 2022 report prepared by the KPMG member firm in Poland

 

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