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 in the Polski Ład for full-time employees.
- How will my full-time salary change in 2022?
- The most important tax changes in the Polski Ład for companies.
- I am an entrepreneur. What are the options?
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.
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-ladSource