Calculation of PIT tax in Poland

Calculation of PIT tax in Poland

Individual Income Tax (PIT) is one of the most popular public gatherings in Poland. Each income of an individual is taxed by the IIT if the law does not provide for the release. It is reported by with reference to “Our Choice”.

Taxation in Poland is subject not only to Polish citizens, but also to foreigners. The amount of their taxation depends on whether they receive the so-called “tax residence” in the state. However, regardless of the status of stay, the income earned by foreigners in Poland will be taxed in Poland in any case.

For the most part, incomes, including those received by an individual on the basis of an employment contract or service contract, are paid during the year by the employer or the customer, who works as a so-called payer and pays contributions to the PIT before tax. Irrespective of the foregoing, in most cases, after the end of the year, each individual must independently calculate his PIT tax for the last year and submit a tax return.

Term of drawing up tax returns

The deadline for most tax returns for 2017 ends April 30, 2018. The main type of declaration, which consists of the majority of taxpayers, is PIT -37 – this form is used if during the year the income was received from a Polish payer, that is, income from a contract of employment, a contract for the provision of services, etc.

If the taxpayer receives income from other sources, another type of declaration may be inherent. For example, PIT -36 is a form that is used, if, in addition to the aforementioned incomes, income was received not from a Polish payer (that is, a Polish employer or a customer). For example : income from economic activity, real estate or income from abroad. In the case of other income, it is mandatory to use a separate form.

If the person has been employed on an employment contract or service contract, the employer / customer must, by the end of February, after the end of this year, transfer information to the taxpayer PIT -11 for the previous year. This form contains the amount of income, money that reduces the amount of income, tax payments and contributions to social and health insurance, which reduce the tax base and tax. According to the information contained in PIT-11, an individual must count his income in the annual declaration (most often PIT-37).

The PIT tax in Poland is usually progressive, that is, the higher we have income, the higher the tax rate we pay. Progressive tax rates are 18% for income up to 85,520 zloty per year and 32% for an amount that exceeds this quota.

Tax-free income quota

There is a tax-free income quota, which by the end of 2017 is 6,600 zlotys per year. For those who earn over 6,600 zlotys, this quota is proportionally reduced (the higher the income of the person, the less is the quota-free tax). In the case of persons who receive taxable income of PLN 127,000 or more, all their income will be taxed (free of charge). In 2018, the tax-free quota will increase to 8,000 zlotys, but may also vary depending on the individual’s income.

Progressive tax is paid, in particular, on income from an employment contract, a contract of employment or a contract for the provision of services. In the case of other sources of income – may be regulated by other rates.

Revenues can usually be reduced by the amount they receive, which is differently set for different types of income. Contributions to social and health insurance, paid during the year, allow you to reduce both the tax base (social insurance contributions) and the tax itself (part of the contributions to health insurance). If during the year you had a Polish employer or a customer, both the income and the quotas will be recorded in the PIT-11, which you will receive from it.

Deductions and benefits

In addition, when calculating their income received during the tax year, the taxpayer can use deductions and benefits that will reduce income or tax. The most popular are child benefits. If a taxpayer brings up one or two children, the tax can be reduced by 1 112, 04 PLN per child, the third child will increase the amount of benefits to 2, 000.04 PLN, and the fourth and subsequent – up to 2,700 zlotys. A child must be younger than 18 years of age or, if still in education, less than 25 years of age and can not receive income above the free quota. In the case of raising one child only, the benefit is granted if the parents received no more than 1,12,000 zlotys per year. Child benefits can be used even when children live permanently outside of Poland.

Other privileges include, in particular, benefits related to the payment of contributions to the church or charitable organizations, expenses for the use of the Internet or for rehabilitation purposes. Such deductions are limited and require relevant documentation.

Anyone may also indicate in a tax return a charitable organization in whose favor he would like to transfer 1% of his tax. Such deductions are not related to additional costs: a part of the tax instead of getting into the state budget, will be transferred to the charity’s account.

You must make a tax return on time. In case of delay, a fine may be imposed. If you even fall into this situation, punishment can be avoided if you make a statement as soon as possible, add to it the so-called “czynny żal”, that is, a letter in which you can refer to ignorance of the laws and volunteered to admit failure to comply with the terms.

If there is a “underpaid” tax from the tax return, this issue must be resolved no later than April 30 after the end of the year (until April 30, 2018, when it comes to the 2017 declaration) by paying a specified amount to the account of the relevant tax department (Urzad Skarbowy). If the issue is resolved late, one must also take into account the amount with interest, which is 8% per year.

If, instead of the underpaid payment, there is an “overpayment”, the tax must return the relevant amount within three months to the payer’s bank account (if the taxpayer has reported his account) or through the Polish postal service at the address indicated in the annual declaration.

Mariusz Piskuru, Senior Consultant

Anastasiya NAOMCHIK-TURKISH, manager

Maya ZABAVSKA, Senior Manager