Polish Order 2.0 - entrepreneur will again choose the form of taxation for 2022

The draft bill amending PIT regulations adopted by the Council of Ministers is to allow entrepreneurs to change the form of taxation. However, this option will not be available for everyone and it is worth consulting an expert before making a decision. When and who will be able to choose a different form of tax settlement for 2022?

Change of the form of taxation for 2022 - the rules

One of the solutions of the draft bill to amend the PIT Act, which is intended to reduce and simplify taxes in Poland, is to allow some entrepreneurs to change once again the form of taxation for 2022.

Learn more: Lower PIT and no middle class relief from July 2022 

Re-choice of taxation form will be available to entrepreneurs who:

• settle according to a tax scale, a flat tax or a lump sum,

but the change must be to a tax scale, i.e.

• from a flat tax to a tax scale by 30 April,
• or from a flat tax to a tax scale by 30 April 2022 or from 1 July to 22 August.

Note, taxpayers who have opted for the tax scale in 2022 are not entitled to benefit from the above option.

Moreover, in order to switch from a flat rate to a tax scale from 1 July 2022, eligible taxpayers will have to submit declarations on the change of taxation form (by 22 August 2022).

Also, any taxpayer who decides to switch from a flat rate to a scale will be required to keep a revenue and expenses ledger.

One deadline for submitting the tax return

The draft bill also provides for the introduction of only one deadline for submitting the tax return regardless of the chosen form of settlement.

At present, the deadlines depend on the form of taxation, for example, entrepreneurs settling based on a lump sum submit returns by 28 February. From 2023 onwards, all taxpayers (natural persons) will settle by 30 April of the following year.

Tax form choice - professional advisory services

As a result of the planned changes to the Polish Order, entrepreneurs who settle according to a lump sum or flat tax will soon be able to opt again for the tax scale. 

The choice of the form of taxation may not be as simple as it seems, as often much depends on various factors and the form of business itself. What is advantageous for one entrepreneur may not necessarily prove beneficial for other companies. Therefore, it is worth consulting experts before making the final decision.

How can we help?

The Crowe Tax Advisory Team offers comprehensive support in the area of choosing the optimal form of taxation. Please feel free to contact our experts: [email protected]