The New Polish Order - changes in taxation

Below we present a brief description of some of the assumptions of the Polish Order. The following information has been prepared on the basis of data available on the website of the Ministry of Finance and our own analyses, since no draft bills relating to the presented changes have yet been published.

Health contribution

According to the planned changes, all insured persons paying a health contribution will no longer be able to deduct the health contribution incurred from their tax. In order to limit unfavourable financial effects for employees, an additional tax relief is likely to be introduced for those with income based on an employment contract between PLN 70 000 and PLN 130 000 per year.

Moreover, entrepreneurs will no longer have the option for a flat rate health contribution. It is to be calculated proportionally to income, i.e., analogically to income earned under an employment contract.

Personal income tax

One of the most important proposals is to raise the tax-free amount to PLN 30 000, as well as the second threshold of the tax scale to PLN 120 000 (currently 85 528 PLN). These limits will apply not only to employees, but also to pensioners and those earning income from business activities (taxed in accordance with the general rules).

The proposals outlined under the Polish Order suggest that Poles returning from emigration from 2022 (and in the following year) will be able to indicate in their income tax returns the amount to be taxed lower by PLN 50 000. Furthermore, a capital return programme is planned for Poles who have assets or hidden income abroad. Poles returning with assets and income will not have to worry about initiating tax avoidance proceedings.

Corporate income tax

Under the New Polish Order, there have also been presented some proposals of changes in the area of corporate income tax, which are particularly intended to support investments. A special service for strategic partners will be created, procedures and settlements will be simplified and favourable rules of profit taxation will be introduced.

Moreover, the application of R&D and IP-Box relief will be extended by covering the further stages of the processes. A larger number of taxpayers will also have the opportunity to benefit from the so-called Estonian CIT. According to the assumptions, relief for prototypes and for automation and robotisation will be introduced.

The relief for prototypes, will allow the deduction of costs associated with the preparation of prototype solutions, which do not qualify for the relief for R&D works. On the other hand, the relief for automation and robotisation of production will allow the deduction of costs associated with the acquisition and implementation of solutions which automate production processes.