Object of the income tax

All kinds of income are liable to tax. There are, however, some exceptions e.g.: disability pensions and damages allocated on the basis of the separate regulations as well as the prizes coming from games of chance, lotteries if the total amount gained at once from this games does not exceed 2.280 PLN. If a taxpayer gains incomes from more than one source, the object of taxation, in the given tax year, is a sum of incomes from all revenue sources (so called principle of incomes accumulation). Unless the specific regulations constitute otherwise the income from the different sources is a difference between gross income and the expenses directly or indirectly linked to the income generated, gained in the tax year.

If these expenses exceed the sum of revenues, the difference is a loss from the revenue sources.

Deductions and reliefs in 2017

The Act on Personal Income Tax introduced the possibility of using the following deductions and reliefs by a taxpayer, e.g.:

1. from income – taxpayers may deduct the following expenses (at a stated amount):
• social security contributions
• expenses for rehabilitation purposes incurred by a taxpayer who is a disabled person, or a taxpayer who supports the disabled
• donations for special purposes i.e. religion cult, to NGO`s for public benefit purposes (not more than 6% of taxpayer`s income)
• the expenses of using Internet for taxpayers who did not benefit from the tax credit in previous years. The deduction applies to expenditures incurred throught the following two years, up to 760 PLN in the tax year
• relief on research and development (B+R)

2. from the tax:
• obligatory health contributions ( not more than 7,75% of calculation base)
• child relief:

- monthly 92,67 PLN for the first child, if the income received by parents (married or single parent, who meets special requirements) doesn't exceed in the tax year the amount of 112.000 PLN. For other parent the threshold of income is  56.000 PLN,
- monthly 92,67 PLN for the second child,
- monthly 166,67 PLN for the third child,
- monthly  225 PLN for the fourth and every next child.

 

Rates and methods of income tax calculation

In the year 2017, there are the following methods of the tax calculation concerning income received from employment relationship, pensions:

Base for tax calculation  in PLN		Personal income tax amounts to
over	up to
	85 528	18% minus the amount decreasing the tax
85 528		15 395,04 PLN + 32% of surplus over 85.528 PLN minus the amount decreasing the tax

 

Moreover Personal Income Tax Act states other tax rates i.e.:

• 20% of revenue from legal and consulting services provided by foreign person
• 19% of income from deposit and loan percentages
• 19% of income from money capital for example chargeable selling securities
• 10% of prizes won in competitions, games and mutual bets or awards connected with premium sale
The above mentioned incomes cannot be joined with revenue received from other sources.

Tax returns and income tax collection

In case of income received from employment, employers, as tax remitters, are obliged to calculate, collect throughout the year income tax advance payments and pay them to the competent tax authority (tax office). The tax advance payments for the period from January to November shall be remitted by the 20th day of every month for the preceding month. Taxpayers are to submit their annual tax returns and pay the income tax on the basis of tax returns until 30th April of the following year. The due income tax, in case of employment relationship, is the difference between the due income tax (assessed on the basis of tax return) and the sum of all tax advance payments paid within the tax year by tax remitters.
When it comes to taxpayers who receive income from i.e. an economic activity or self-employment they are obliged to pay monthly or quarterly (in case of small taxpayers) tax advance payments for their income tax.

Lump sum on registered income is paid on monthly or quarterly basis. While after the end of each tax year no later than to January 31st of the subsequent year taxpayers have to submit their tax returns.