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A LUMP SUM TAX ON REGISTERED INCOME

A lump sum tax oN registered income  is a simplified form of settlement of income tax.

The basis of assessment shall be income without tax deductible costs . The tax shall be reduced, as a first step, by the amount of health insurance contribution.  Taxable persons paying tax in this form have the right of deduction of registered income by  the repayment of interest on the commercial housing loans, donations to public benefit organizations and for religious worship and 1 % of the lump sum in case of contributions to public benefit organizations..

If you use this method, you must keep register of revenues separately in respect of each tax year, equipment register and list of fixed and intangible assets.

Who can choose this method

In order to make use of this form of taxation, you must meet several conditions, you cannot be a taxable person pursuant to a tax card, select this type of taxation during registration of economic activity and then only on condition that the revenue for the preceding year did not exceed EUR 150 000 (in accordance with the Euro rates published by the National Bank of Poland on the first working day of October of the year preceding the tax year).

Written declaration on the choice of taxation in the form of a lump sum of registered income tax for a given tax year, the taxable person shall submit to the head of the tax office competent for  the place of residence of the taxable person not later than 20th January of the tax year and in case of starting a business during a tax year, not later than the date of the receiving first income.

Who may not settle in the form of a lump sum tax

Taxation in the form of a lump sum of registered income tax shall not apply to taxpayers whose income in whole or in part, is generated inter alia, for:

  • running of pharmacies,
  • activities of buying and selling foreign currency,
  • activities in the trade of motor vehicle parts and accessories

The tax rates

The tax shall be calculated on the basis of specific rates depending on the type of activity:

  • 20 % of the revenue achieved in the liberal professions,
  • 17 % of the revenue from the provision of services:  reproduction of computer storage media, intermediation in wholesale of cars and light motor vehicles in online and traditional form,  sales of spare parts and accessories, parking, relating to accommodation, publishing, management of real estate , rental and leasing, photography, counselling for children with learning problems, etc.
  • 8.5 % of the revenue from, inter alia, the service activities, including catering activities in the sale of beverages containing more than 1.5 % alcohol, the income from the rental, lease, tenancy , subtenancy or other agreements of  similar nature, provision of pre-school education, etc.
  • 5.5 % of the revenue from, inter alia, manufacturing activities, construction, sale of single public transport tickets, postage stamps, etc.
  • 3.0 % of the revenue from, inter alia, commercial and service activities and the catering business, with the exception of revenue from the sale of beverages containing more than 1.5 % alcohol by volume,  interest on bank accounts held in the connection with pursued economic activity, services related to livestock production, sale of fish from own catches, etc.

The lump sum rate shall be determined according to the type of the business activity.  It is possible to tax one of the activities by lump sum tax and other according to other forms of taxation.

It is also possible to use many different rates at the same time.  If taxable person does not keep records in a way that ensures setting revenues  for each type of activity then lump sum tax on registered income shall be 8.5 % of revenues, and if normally the rate would be higher - it is 20 % or 17 %.

How to settle a lump sum tax

As far as settlements and reporting obligations are conncerned taxable persons are required to pay the output tax to the account of the tax office by the 20th day of the month following the month for which the lump sum is to be paid, and for the last quarter of the tax year.  Taxable persons whose revenues in the preceding tax year did not exceed EUR 25 000 may calculate the tax and pay the output tax on a quarterly basis.

They are also required to submit to the tax office competent for the place of residence a statement on the amount of generated revenues in the tax year, amount of the deduction made and a lump sum of registered income tax, no later than 31st January of the following year on the PIT-28 form.

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