personal income tax in poland 2010

8/3/2019 Personal Income Tax in Poland 2010

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Poland Introduction into Polish tax system

Brief history Main types of taxes Tax revenue statistics

Personal Income Tax (PIT) Subject Scope of tax liability Object Sources of revenue Tax allowances and deductions Tax rates Flat tax rate and lump-sum taxation options Collection

Objectives of PIT

VIU Taxation of Business Entities Fall 2011


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Located in the middle

part of Europe

Covers area of 312,685km2 (size of

New Mexico)

Population of 38,186,860

Under communist regime

till 1989-90

Member of EU, NATO, UN, WTO,

OECD

Local currency is the zloty ($1=

3.22 ZL as of 11/10/2011)



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New democratic country needed new tax system First major reforms:

Personal income taxation (PIT) in 1992 Value added tax (VAT) in 1993

PIT 1992-today

Progressive system with three nominal tax rates: 20%, 30%, and 40% Since 1992 gradually reformed

tax rates changed

tax scope extended

some deductions and reliefs added or eliminated

Reforms supported by process of adapting and harmonizing Polish

law with EU law In1997 - allowances deducted from tax amount and not tax base In 1999 - created health insurance system based on separate contributions

and changed way of payment of social insurance contributions In 2008 - reduced personal income rates to 18% and 32%



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Direct taxes

Corporate Income Tax (CIT) Personal Income Tax (PIT)

Tax on Civil Law Transactions(TCLT)

Real Estate Tax

Tax on Means of Transport

Inheritance and Donations Tax Agricultural Tax

Forestry and Tonnage Tax

Tax on Dogs

Indirect taxes

Value Added Tax (VAT) Excise Duty

Game Tax


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2000 2005 2009 2010

Total tax revenue 119,644 155,860 214,879 222,553

Indirect taxes of which: 79,671 115,672 154,958 165,190

Value added tax VAT 51,750 75,401 99,455 107,880

Excise tax 27,312 39,479 53,927 55,684

Income taxes of which: 39,956 40,185 59,921 57,363

Corporate income tax 16,868 15,762 24,157 21,770Personal income tax 23,088 24,423 35,764 35,593

Source: Central Statistical Office GUS (2011)


in Mio. ZL


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PIT 16%

CIT 10%

Excise tax

25%

VAT 49%

Structure of tax revenue in Poland (2010)


Source: Central Statistical Office GUS (2011)


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Regulated by the Act

of 26 July 1991 on

Personal Income Tax

(PITA)

Refers to income of

individuals



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Each natural person with his/her income

Each tax resident in Poland is obligated to pay taxes,

independent of the source and origin of the income

If any personal or economic interests located in Poland or If more than 183 days of the tax year spent in Poland

Option of joint taxation for couples Married for the whole tax year

No earned income subjected to the flat tax rate of 19%

Tax due: twice the amount of income tax due on half of a joint income



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Unlimited

Residence in Poland

Over 183 days of the tax year spent in Poland

Center vital interests located in Poland

Subject to taxation on their worldwide income

Limited

No residence in Poland

Subject to taxation only with the income gained inPoland

Tax treaties

Used in case of conflict between jurisdictions

Determine in which country the person is the tax resident

Prevent double taxation

Poland has tax treaties with 60+ countries, i.e. USA, UK, Germany



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Gross employment income Base salary

Bonuses and awards Compensation for unused holidays Overtime payments

Income from partnerships Partnership in the meaning of Polish Civil Code Registered partnership

Professional partnership Limited partnership Limited joint-stock partnership

Income from joint ownership joint enterprise

joint possession or joint use of things or property rights

Dividends



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Exemptions:

Scholarships

Social distributions

Indemnities (incl.indemnities from the

insurance of property and

person)

Benefits from the employerreceived under health and

safety regulations

Revenues obtained from illegal actions from most agricultural

activities and forestry falling under the Act on

Inheritance and Donation Tax resulting from separation of

property co-owned byspouses

of ship owners which issubject to tonnage tax



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Revenue from: Dependent services Independent, personally performed

services Business activity Forestry and special sectors of

agriculture Rental and lease services Financial investments and property

rights

The sale of tangible and intangibleproperty

Ship owners activities Other revenue



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If income from more than

one source

the sum of all sourcestaxed with exceptions of:

revenue which is subject to

lump-sum taxation

income which is subject to flat-

rate tax



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Standard reliefs Non-standard reliefs non-refundable credit of PLN 556.02

per person.

tax credit of PLN 1112.40 for each

underage child and adult child

attending school.

Health insurance contributions (up to7.75% of 9%)

Social security contributions in full

amount

Social and health insurance mandatory

contributions made in EU, EEA, and

Switzerland work-related expenses

Expenses for rehabilitation of disabled

taxpayer or taxpayer who supports the

disabled

Blood donation, donations for the

public benefit and religious practices

except donations for natural person orbusiness entities (up to 6 %)

Cost of internetup to PLN 760

Donations to public benefit

organizationsup to 1%

Expenses of purchase of new

technologies

workplace = place ofresidence

workplace place ofresidence

one workplace PLN 1335.00 PLN 1668.73

two or moreworkplaces

PLN 2002.00 PLN 2502.06


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Tax base in PLNTax

Over Up to

PLN 3,091 Tax free

PLN 3,091 PLN 85,52818% minus amount decreasing the tax PLN

556.02

PLN 85,528PLN 14,839.02 + 32% of surplus over PLN

85,528



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19 percent flat rate Lump-sum taxation

Income from:

non-agricultural activity (if not already

taxed)

transfer against payment of securities and

financial derivatives

transfer against payment of shares in

companies with legal personality

Income from:

Royalty payments received by person with

limited tax liability in Poland (20%)

Dividends and other revenues from

involvement in profits of legal entity (19

% )

Interests or funds in a form of savings,

holding or investment (19%)



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Income treated separated from

other sources Not stated in the annual tax returns

Subject to flat-rate tax revealed

in a separate tax return on

income from capital gains and

income from business activity

No tax allowances anddeductions available



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Charged on yearly basis Tax payments in advance required except lump-sum tax

Should be collected and transferred by the 20th day of the

following month except taxpayers who started their own business

activity

Annual tax return filed by 30th day of April of the following year

together with the payment of the difference between final tax due

and the tax advances

Required to be collected and transferred by the taxpayer himself

except in case of remitters

service relationship

employment relationship retirement and disability pensions

in most cases of lump-sum taxation

Flat-rate of 19 percent undergoes the general rules on submission

of the annual tax statements



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1. To collect revenue for the

government

2. To encourage or discourage

certain behavior3. To decrease of social inequality

in the country

4. To implement the principle of

fair distribution of publicexpenses



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personal income tax in poland 2010

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