21.05.2021

New Polish Order – we know the government’s tax guidelines

Mateusz Kozieł

On Saturday, May 15, 2021, the framework assumptions of the new government program, laboriously referred to as the New Deal or the Polish Deal, were presented. The details of the program will result from the regulations implementing it, which we have not learned yet. However, now the assumptions of the program raise a lot of emotions. According to them, the program is aimed at supporting the economy and citizens in the period of gradual recovery from the effects of the COVID-19 pandemic.

Increase of the PIT-free amount for the lowest-earning citizens

According to the announcement, the personal income tax (PIT) free amount will be raised from the current PLN 8,000 to the proposed PLN 30,000. Thus, in practice, all persons subject to the tax scale (e.g. employees, persons employed on civil law contracts, entrepreneurs not choosing the flat tax) will not pay income tax in a situation where their pure income in a given year will amount up to PLN 30 000.

Higher second PIT threshold

At the same time, the amount of the second tax threshold will increase to PLN 120,000. In this case, the individual’s income will be taxed at a higher rate of 32%.

New health contribution

The rules of calculating health contribution are to be changed. Instead of the currently binding lump-sum health contribution, it is planned to relate its amount to the amount of income achieved. The health contribution will be calculated as 9% of the pure monthly income. At the same time, it is planned to introduce a minimum contribution applicable to months in which the designated income is not earned.

No tax-deductibility of health care contributions

The New Deal is not only an effective increase in the health premium but also the lack of deductibility of the health premium from income, as is currently the case. In the worst-case scenario, not being able to do so will mean a tax increase of 7.75% per year.

Middle-Class Relief

The middle-class relief is one of the vaguest and ambiguous announcements. According to the New Deal, it will apply to people employed based on an employment contract (although whether it will be limited to this social group remains to be seen) earning an annual income between 70 000 and 130 000 PLN. In practice, it is to consist of writing off a certain amount from the tax base to maintain tax neutrality for this group.

The above assumptions have not yet been reflected in the draft legislation. Now, however, despite the proposed reliefs, they are subject to unambiguous criticism. This is because the program significantly increases the tax burden on people in the middle class. Small and medium-sized entrepreneurs are to suffer above all. Therefore, already you can see preparatory actions for the program in their group. More and more entrepreneurs turn to our neighbors for help. In search of more attractive forms of income taxation, they direct their entrepreneurial eyes towards the Czech Republic and Slovakia.

The government assumes gradual implementation of the program, which will enter into force already in July 2021.

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The administrator of your personal data is KWKR Konieczny Wierzbicki i Partnerzy S.K.A. with headquarters in Krakow, ul. Kącik 4, 30-549 Krakow. Your data will be processed for the purpose of sending our newsletter. You have the right to request access to your personal data, their copies, rectification, deletion or limitation of processing, as well as the right to object to the processing and to lodge a complaint with the supervisory authority. More details can be found in our Privacy Policy.