The Polski Ład (Polish Order/Deal) raises a huge number of questions and uncertainty. In particular when it comes to the forms and type of taxation of our income. However, the Polski Ład is not only about changes in our salary and taxation. Although this article focuses on taxation, clicking this link will take you to the previous article in my blog, where you can learn more about the general concept and changes introduced by the Polski Ład.

I must admit that I spent literally a few days collecting and analyzing materials that will allow me to make (I hope) the best possible decisions regarding taxation next year. As I am not a tax advisor myself, I will present below information on the forms of taxation together with the source from which I obtained this information. Like it or not, the sources will lead mostly to Polish-language websites, as my financial gurus who worked on the subject of the Polski Ład, are Poles 😊 So, feel invited to read the topics and content below.

The most important tax changes for full-time employees.

  • Increasing the tax-free amount to 30,000 zł (annually)
  • Increasing the tax threshold from 85,000 to 120,000 zł (annually)
  • Elimination of the right to deduct health insurance cost from the tax (PIT)
  • Tax relief for the “middle class” earning between 68,400 zł and 133,700 zł (annually). This applies to employees and entrepreneurs on a progressive tax scale.
  • Joint spouse settlement already in the year of marriage.
  • PIT relief for people who are 60/65 old and working with the right to the retirement.
  • Tax relief for families with 4+ children. Additional 85,000 tax-free amount for each parent.

What is the conclusion? People earning less than 133,700 zł per year should not experience increases resulting from the changes introduced by the Polish Order. People who will benefit from the Polski Ład, are the group of the least paid people and heads of large families.

How will the Polski Ład change my net salary in 2022?

So here we come to the fundamental question. How will these changes affect your net salary in 2022? Basically, according to the calculations from the latest version of the Polski Ład calculator, created by podatki.gov.pl (official polish government tax website) – you should not experience increased tax changes for a gross payment of around 12,800 zł. I present below a few examples (in Polish) of several different salaries. The first picture contains a translation with explanation of specific fields. Unfortunately, the “google translate” does not cooperate well with this site.

Few salary examples below:

As we can see, people earning less than 12,800 will not be impacted by the increased taxation and in case of lower salaries, the changes may be even beneficial. But what in case of a full-time employee with a gross salary of more than 12,800 zł? Is there any way to optimize the tax? Unfortunately, not much. All that is left, is to use the all possible tax reliefs with the annual PIT settlement. You can read more about it on my blog, in the article about PIT – click here to open it in a new page. And in the link below, I am providing a link to the calculator, which I used to generate the above mentioned examples. This way you can enter your gross salary yourself and compare it with your current income. Click here to open the calculator.

The most important tax changes in the Polski Ład for companies.

  • Health insurance 4.9% for a linear scale tax and 9% for the progressive scale tax from 2022, calculated on the basis of income. Non-tax deductible.
  • Lump sum health contribution for tax paid on the base of lump sums.
    • 316 zł a month for the revenue of 60,000 zł
    • 527 zł per month for the revenue up to 300,000 zł
    • 948 zł per month for the revenue over 300,000 zł
  • The minimum health contribution (also in case of no revenue and no income!) is 9% of the minimum wage.
  • Cancellation of the tax card.
  • Health insurance contribution for the tax card – 9% of the minimum wage.
  • Reduction of the flat rate for some professions in case of using lump sums.
  • The sale of leased items (in particular cars) will be treated as revenue from business activity.
  • Obligation to provide card payments (if you have a fiscal cash register).
  • Obligation to integrate the fiscal cash register with the payment terminals.
  • Illegal employment becomes a risk solely for the employer.

The source of the above information is a Polish blog: “Mistrz Podatków” (tax champion). The owner of this brand is Marek Golec. A graduate of economics and international finance. Licensed tax advisor with extensive experience in accounting for virtually any activity. He also specializes in the taxation of real estate, cryptocurrencies, stocks and precious metals. He is also involved into the tax aspects of cars used in companies.

Why am I mentioning it?

I am an entrepreneur. What are the options?

The higher earners may want to change the type of employment from full-time to B2B. A form of employment – Business to Business. This gives you many more options for tax optimization than working on a full-time job. Besides, every company that already operates in Poland tries to find the best option of taxation. The above-mentioned Marek Golec has prepared a tax calculator which, based on the available information, shows us on which form of taxation you will lose the least.

Therefore, if you are entrepreneur living in Poland or plan to start with B2B, I encourage you to visit the “Tax Master’s” website.  You will find there the aforementioned calculator available in Excel. This tool will allow you to enter your own data and choose the best option for you. Unfortunately – you will need to know Polish, ask for help your Polish-speaking friend or eventually be very skillful in using the translator 😊 Just click here, to open it in a new tab. Below you can find a print screen from mentioned calculator.

However, I can suggest that the Lump sum as a form of taxation, becomes much more attractive for B2B company model led by IT specialists and programmers. Which means, companies that do not generate a lot of costs.

Summary of Polski Ład and impact on your salary

As I write this text, I hope that I will be able to cover most of the tax-related questions about Polski Ład for Expats living in Poland. However, I would like to emphasize that the “Polish Order” consists of almost 700 pages of tax regulations together with the justification and assessment of the effects of these regulations. I will say more. Much of these provisions are still unclear and imprecise. This leaves a lot of room for a variety of interpretations. Therefore, let me know in the comments below if I managed to answer you concerns about the tax changes related with Polski Ład.

Would you like to read more publications about “Money and Finance” on my blog? Click here. You may also get to main “Table of content“, which is available here.

Special thanks to Eamon Gosney, who has helped with proofreading of this article.

JakOszczedzacPieniadze.pl; mistrzpodatkow.pl; podatki.gov.pl/polski-lad/kwota-wolna-polski-lad/kalkulator-wynagrodzen-polski-lad

Source

14 Comments

Mieczysław · 21/12/2021 at 20:45

Maybe worth to mention “Ulga na powrót” which means tax benefit for ex-emigrants but is also broadened to new comers (expats/new immigrants) in Poland. Totally is up to 85k zł for consecutive 4 years.

    Mateusz · 22/12/2021 at 22:42

    Very good point Mieczysław. Thank you for brining up this topic. I will come back to it with more details, since it is a material for separate post.

Syed Faiz · 23/12/2021 at 21:49

Hello there, If I am earning more than gross 12800 pln per month and I have a family(wife and kid) living with me and they have no income.. will this new tax laws still impact me?

    Mateusz · 23/12/2021 at 21:56

    Yes, they will. However, you are able to use few tax reliefs during annual PIT submission, which supposed to help you with reducing potential costs. And I will do my best, to update current PIT article on my blog somewhere around February, with the newest information coming from Polski Ład.

JMS · 04/01/2022 at 20:54

Hello, I am single earning more than 13K per month. Are there any advices for tax saving? Thank you in advance.

    Mateusz · 05/01/2022 at 05:22

    Hello JMS,

    there are few ways of doing it. However Polski Ład is changing a lot as we talk about annual Personal Income Tax rules. Below you have a list of reliefs from previous years:

    Internet relief
    Relief for children – pro-family relief
    Rehabilitation relief
    Relief for a car dedicated to a disabled person
    Medicines costs relief
    Donations to non-profit organizations
    Donations for religious worship
    Donation of blood donors – blood relief
    Donations for charity and caring churches
    Contributions to IKZE
    Donation for the fight against COVID-19
    Thermo modernization relief
    Donation of notebook computers
    Relief for young people – people younger than 26 years

Bouchra Bou · 05/01/2022 at 13:38

Hi Mateusz ,
I have a question please , my annual gross salary is less than 120 000 zl , however my husband gross salary is more than 160 000 zl , knowing that i am pregnant with our first child.

how we can get a relief as a family and what is our best options ?

    Mateusz · 07/01/2022 at 19:22

    Hello Bouchra,

    It is really hard to advise, as I do not see the full picture of your situation. However, it does not change very much with first kid in your case, because of the Polski Ład, which deactivated relief for a first child for parents which are submitting annual PIT declaration together and have higher income. Still, there are few reliefs to be used in your case. Relief for Blood Donation, Internet, IKZE relief or Donations to non-profit organizations. You can read more about it here:

    PIT in Poland

    You cam also think about proper marriage settlement (division of property), but I am not a tax advisor. Therefore, if you can’t count it on your own, I would strongly recommend to contact an accountant or even a professional tax advisor if your case is more complexed. Such visit will cost a bit, but might allow you to save literally thousands of Złotych.

      Syed Faiz · 11/01/2022 at 20:41

      Hi.. I am an expat and moved to poland in August 2021.. so my total stay in Poland for the year 2021 is less than 180 days.. am I eligible for tax refund

Marco · 11/01/2022 at 01:10

Hi all,

I just got my first salary I earn 12k a month and previous year this was like 8550 net, now it is like 7800 net. I thought we would not be affected, but this is a huge increase in “tax” (I consider everything between gross and net as tax, whatever they call it”. So how is this possible?

    Mateusz · 11/01/2022 at 07:51

    Hello Marco,

    it is not only you, who is affected. All state employees who are paid at the beginning of the month (teachers, health care, police officers, firefighters) were paid less net salary as well. Turns out there’s a bubble in the Polski Ład – which lowers the salary even more than they expected. So on this moment, (11 days after the Polski Ład was introduced), PIS is working on amendments. Unfortunately, there are no specific data on when or how this should be rectified.

Syed Faiz · 11/01/2022 at 20:39

Hi.. I am an expat and moved to poland in August 2021.. so my total stay in Poland for the year 2021 is less than 180 days.. am I eligible for tax refund

Alican · 02/02/2022 at 17:21

Hi,

I just had a change in my company regarding to payment of salaries to the beginning of month and i earn around 11k per month brut. However I had a huge reduction in my
Salary even though i am not above 130 barrage. What ia the reason of this ?

Polish Deal - "Polski Ład" in English - Blog for Expats living in Poland · 08/02/2022 at 09:07

[…] I described in details Polski Ład and impact on your salary in separate article. (click here) […]

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