Changes in tax regulations from 2018
As of 1 January 2018, many changes in tax regulations will become effective. The main objective of the new regulations is to tighten the tax system, especially corporate tax, and to link this tax with the place of generating income by large, international companies. In addition, some of the changes in CIT result from the obligation to implement in Poland EU directive dated 2016 (ATAD) concerning the transfer of taxation outside the EU internal market.
Main changes in PIT
- Increasing the one-off depreciation threshold for the acquisition of fixed and intangible assets from PLN 3,500 to PLN 10,000. You can find information on depreciation of fixed assets in the article Depreciation, also see the interactive guide Depreciation of fixed assets in the company.
- Exemption from the obligation to pay an advance payment for income tax, which occurs only after exceeding PLN 1,000 of due advance payments (total). The amendment only concerns the way advances are paid, i. e. other deadlines and frequencies. The tax liability remains unchanged. As an entrepreneur, you continue to calculate your income yourself and monitor excesses of the total tax due in the amount of PLN 1,000. Learn more about how to calculate income tax.
- Abolishing the obligation to report to the competent head of the tax office the keeping of revenue and expense ledger if the entrepreneur commences business activity or in the previous year he maintained accounting books or was taxed in a lump-sum form. Currently, if you start to keep a revenue and expense ledger, you must report this within 20 days to the tax office. Learn more about the tax revenue and expense ledger. See also the material How to keep records when accounting on general rules. The obligation to notify the head of the tax office about entrusting the tax revenue and expense ledger to the accountancy office, if the entrepreneur entered into an agreement with the accountancy office for keeping this book.
- Increasing the income tax allowance from PLN 6,600 to PLN 8,000. Above this income threshold, up to PLN 13,000 is reduced to reach PLN 3,091. Value of the tax allowance above PLN 13,000 to PLN 85,528 is PLN 3091. From PLN 127,000 onwards it is equal to PLN 0. More about taxation.
- Incentive programs are excluded from the source of cash capital and included in the sources of income where they were obtained (e. g. from an employment relationship or activity performed on a personal basis). Receipt of a financial instrument from an employer, e. g. shares, is combined with income received under an employment contract (rather than treated as income from a source of cash capital). If your company carries out employee incentive schemes, i. e. additional remuneration of employees by transferring shares, stocks or other similar financial instruments, remember that this is taxable at the time of sale. Income arises not when the financial instrument is received from the employer but only upon its disposal against payment. The tax is calculated on a scale of 18% or 32%.
- Increase of the possibility to count 50% of tax deductible costs for authors to the amount of PLN 85,528 per year. This limit shall apply if your activities are related to the professions connected with architecture, interior design, landscape architecture, urban planning, literature, fine arts, fine arts, music, photography, audiovisual production, computer programs, choreography, artistic violin-making, folk art and journalism, research and development as well as scientific and didactic, artistic, acting and stage arts, theatre and stage directing, dance and circus art, as well as conducting, vocal arts, instrumentalism, costume art, stage design, audiovisual production of directors, screenwriters, picture and sound operators, editors, stuntmen.
- Introduction of the so-called minimum income tax on real estate in the amount of 0.035% of the tax base for each month on a fixed asset - commercial real estate. This applies to such properties as shopping mall, department store or office building, whose initial value exceeds PLN 10 million. The tax base is the income corresponding to the initial value of a fixed asset determined as at the first day of each month resulting from the records kept, reduced by the amount of PLN 10 000 000. Taxpayers will be required to calculate the tax for each month and pay it into the account of the tax office by the 20th day of the month following the month for which the tax is paid. Where taxpayers pay quarterly advances, the tax calculated for the months of the quarter shall be deducted. When calculating CIT advance payment (PIT), this tax can be deducted.
The taxpayer can therefore: pay the minimum tax and, when calculating CIT(PIT) advance payment deduct this tax on PIT (CIT) due or pay the full CIT (PIT) advance payment if it is lower than the minimum tax amount.
- Introduction of a limit of up to PLN 3 million included in tax deductible costs in a given tax year for expenses constituting intangible services (e. g. license agreements, consultancy services, accounting, market research, legal services, trademarks). The limit applies only to services which you purchase from affiliated entities.
- Donations - depreciation write-offs on fixed assets and intangible and legal assets acquired by way of donation may be included in tax deductible costs only if the value of the inheritance or donation did not benefit from the exemption from inheritance and gift tax. Taxable gifts that falls within the amount of inheritance and gift tax-free may also be a cost.
- Increase in the amount of tax exemptions from benefits from the Company Social Benefits Fund (ZFŚS) - from PLN 380 to PLN 1,000, holiday subsidies for persons up to 18 years of age not financed by the Social Fund - from PLN 760 to 2,000 and subsidies from the company union fund received in case of individual random events from PLN 2,280 to PLN 6,000. Company Social Benefits Fund.
Major changes in lump-sum income tax
- The rate of 8.5% lump sum for private rent is limited to 100,000 PLN per annum of income, calculated jointly for spouses. A rate of 12.5% on surplus over PLN 100,000 was introduced. If you rent a property and it is your additional source of income then the rate is still valid for 8.5%. If renting is the main source of income then a higher rate of 12.5% applies.
Main changes to CIT
- Separation of income derived from capital sources from other income. Income is treated as the sum of income received from the same source, i. e. separately from capital gains and separately from other than capital sources. The 19 % tax rate applies to each of these revenues. If your company earns income from only one source and in the other it incurs a loss, e. g. capital gains, then each income is taxed separately, without it being possible to deduct any loss incurred in the other source. However, the loss can be deducted in the following 5 tax years. For more information, see How to calculate the loss.
- Changes in the capital group regulations, e. g. lowering the average capital of companies within the capital group to PLN 500,000, in 2017 it was a capital of PLN 1 million, reduction of the parent company's share in the share capital of subsidiaries to the level of 75% (change from 95%), shortening the deadline for the notification of an agreement on the formation of a capital group to 45 days before the beginning of the tax year, registration and refusal of registration is subject to the provisions of the tax code, after registration of the agreement by the tax office, the capital group may not be extended by other companies or reduced by any of the companies forming the group, with the exception of the acquisition of the company forming the tax group by another company from that tax group, the extension of the period to 3 years, in some cases, when the company cannot re-enter the new capital group, in case of a breach of the conditions of operation, the companies forming the tax group after its dissolution will have to settle retrospectively (even up to 3 years) CIT as if PGK didn't exist at that time, exemption from the costs of donations.
- Exemption from the obligation to pay an advance payment for income tax, which occurs only after exceeding 1,000 PLN of due advance payments (total).
- Introduction of the so-called minimum income tax on real estate in the amount of 0.035% of the tax base for each month on a fixed asset - commercial real estate. If your company owns a shopping centre, department store or office building, the initial value of which exceeds PLN 10 million, you will pay this tax. See the article Real Estate Tax.
- Introduction of a limit of up to PLN 3 million included in tax deductible costs in a given tax year for expenses constituting intangible services (e. g. license agreements, consultancy services, accounting, market research, legal services, trademarks). Caution! The limit applies only to services purchased from related parties.
- Increasing the one-off depreciation threshold for the acquisition of fixed and intangible assets from PLN 3,500 to PLN 10,000. You can find information on depreciation of fixed assets in the article Depreciation, also see the interactive manual Depreciation of fixed assets in the company.
- CFC (controlled foreign company) - change in the rules of CFC taxation and limitation of interest deductible (so-called debt financing cost), change in the definition of a foreign company as a company without registered office or management board in Poland, increase in the limit of shares held from 25% to 50%, even if the resident individually or jointly with affiliated entities exceeds the threshold of 50% of shares in a foreign company.
- The division of the Company's assets as tax deductible cost is calculated from the value of the surplus of the issue value of shares (shares).
- Act of 27 October 2017 amending the Personal Income Tax Act, the Corporate Income Tax Act and the Flat-rate Income Tax Act on some income earned by natural persons.