The Polish Deal Introduces Changes. We Explain the Changes

Polish Deal: Changes in Taxes

The Polish Deal (or Polish Lad) introduces a series of changes. We present the changes in an article explaining what it entails

The most important points of the Act of 29th October 2021 on the amendment of the Income Tax Act for Natural Persons, the Income Tax Act for Legal Persons and some other acts are:

an increase in the income threshold to 120 000 PLN, after which the tax rate rises to 32% (previously 85 528 PLN),
introduction of a 30 000 PLN “tax-free allowance” for all taxpayers who calculate tax using the tax scale (previously 8 000 PLN),
changes in the rules for determining health contribution for entrepreneurs and the elimination of the possibility of deducting health insurance contribution from individual income tax – the contribution will be 4.9% to 9% of the company’s income.
introduction of a tax relief for the middle class.

When Polish Deal takes effect

It is in force since the beginning of 2022

How does Polish Deal change the way of calculating the advance tax on income tax?

From 01.01.2022 the method of calculating the advance tax on personal income tax has changed. It involves:
• 17% minus tax reduction amount: 5 100 PLN – for tax calculation base up to 120 000 PLN;
• 15 300 PLN + 32% surplus over 120 000 PLN – for tax calculation base over 120 000 PLN.

How will Polish Deal impact salaries? Tax relief for the middle class.

According to the information from the Ministry of Finance, employees and entrepreneurs (on the scale) who earn higher salaries can be relaxed about their wages. For such people, the reform will be at least neutral.

For example, an employee with an income of 8 000 PLN gross per month will receive – both this year and next year – 5730 PLN of salary.

The Polish Lad will cover employees and entrepreneurs whose annual revenues are from 68,412 PLN to 133,692 PLN, or from 5,701 PLN to 11,141 PLN gross monthly. Additionally, as a result of increasing the tax threshold, the reform will be at least neutral for those who earn up to 12,800 PLN gross monthly

The preference for the middle class has been defined in Article 26 (1) (2aa) of the Personal Income Tax Act (“Relief for employees or taxpayers who receive income from non-agricultural business activities”).

Anyone who has received income:

• from a job and

• from non-agricultural business activities in a total amount of 68,412 PLN to 133,692 PLN per year can benefit from it.

New ZUS Contribution Deadlines in 2022

Due to the Polish Deal , the new ZUS contribution payment deadline will take effect on January 1, 2022. For most contributors, the deadline for submitting settlement documents and paying for health and social insurance will change. Only for budgetary and local government budget units, the deadline will remain unchanged to the 5th day of the next month.

For other contribution payers, the deadline will depend on whether they have legal personality or not:

  • by the 15th day of the next month, capital companies (joint-stock and limited liability companies), cooperatives, associations, foundations, etc. will pay and settle for the given month,
  • by the 20th day of the next month, other contributors, such as those paying contributions only for their own insurance, will perform this obligation, such as personal companies (public, partnership, limited partnership, limited joint-stock partnership).

The new deadlines apply to paying contributions for social insurance, health insurance, FP, FS, FGŚP, and FEP settled in documents submitted for January 2022 and subsequent months.