Poland: Update on legislation implementing the “Polish Deal”

The legislation is now to be submitted to the Senate.

The legislation is now to be submitted to the Senate.

The Lower House of Parliament (Sejm) on 12 May 2022 passed legislation amending the individual (personal) income tax law and certain other laws, implementing the “Polish Deal 2.0” program.

The approved amendments would:

  • Set taxes of individual income under general rules (i.e., disability and old-age pensioners, employees, contractors, and entrepreneurs)
  • Reduce the individual income tax rate for the first individual income tax bracket from 17% to 12%
  • Allow the reduction of the taxable base by the remitted health insurance contributions (up to a certain limit) for individuals obtaining revenue from business activity subject to flat tax, fixed amount tax, or lump-sum tax on recorded revenue
  • Set the annual deduction cap for flat taxpayers 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)
  • Eliminate the middle-class relief, with a reservation that taxpayers can still settle the tax for 2022 according to the previously applied rules (i.e., using the middle-class relief), if it proves more favourable
  • Allow taxpayers that in 2022 apply flat tax or lump-sum tax on recorded revenue to switch to taxation according to the tax scale (due to reduction of the individual income tax rate for the first individual income tax bracket from 17% to 12%)
  • Unify the deadlines for individual income taxpayers to make PIT-28 and PIT-28S annual returns due by 30 April of the subsequent tax year
  • Restore the possibility of filing a joint return by single parents together with 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
  • Extend the deadline for submitting certain corporate income tax and individual income tax forms
  • Provide that expenses incurred in relation to acquisition of a historic real estate entered in the register of monuments or participation in such a real estate would not constitute the basis for reducing taxable income (beginning 1 January 2023)
  • Repeal “tax abolition” provisions

The legislation is now to be submitted to the Senate. The amendments brought by the legislation would be effective 1 July 2022. 

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

 

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.