There are two things in life, and one of them is taxes. This regularity is worth remembering, especially when we are starting the new year and in the next few months we will have to pay PIT tax returns for 2017. Check what amount you can deduct from tax, what are the amounts that reduce fees for the state and what tax breaks we have in Poland.
To what amount do you not pay tax?
When you settle accounts with the tax office in 2018, you can expect a full tax refund in a situation where your earnings in 2017 were not higher than PLN 6600 on hand. To find out if you have exceeded your tax-free allowance, you add up all your revenues per year. The income will not be a loan or a loan, regardless of whether you have a family donation or an online loan. You subtract tax deductible costs from the amount received. Depending on the type of contract, they will be 20 or 50 percent. If you benefit from tax breaks and deductions, you also subtract them from your annual income. However, you only include those deducted from your earnings, not from taxes. This way you will get a tax base – if it does not exceed PLN 6600, you don’t have to pay a single zloty to the state. In 2018, the tax-free amount in Poland increases to PLN 8,000.
The provisions regarding the tax-free amount include persons who have obtained income from an employment contract, work or commission. These are taxpayers settling PIT-36 and PIT-37 who pay according to the tax scale. We have two thresholds in it. They determine the amount of tax. The upper limit of the first tax threshold is PLN 85,528. To this amount of earnings, the tax is 18 percent. The surplus over PLN 85,528 is already taxed at 32 percent.
The tax scale does not apply to:
- persons subject to flat tax;
- flat-rate taxpayers and tax payers;
- taxpayers settling income from cash capital, sale of shares or other derivative financial instruments;
- persons who obtained income from the sale of real estate or derivative rights (e.g. sale of a construction plot);
- taxpayers settling private monetary capital and property rights;
- remuneration for law enforcement assistance;
- non-residents who did not choose taxation on a scale;
- awards treated as revenue from bonus sales;
- taxpayers accounting for work under a mandate or work contract if the value of income does not exceed PLN 200 annually.
Natural persons mostly pay taxes on general principles. On the other hand, entrepreneurs have the right to choose. They can decide that they will pay according to the tax scale, and they can also choose e.g. a flat tax of 19%. It is different in the situation of entities with legal personality. They are required to pay CIT.
Tax-free amount with a base above PLN 6,600
Fortunately, the beneficiaries of the tax-free amount are not only those who earn less than PLN 6,600 a year. Also, if revenues exceed this value, a certain amount exempt from tax is maintained. Only when the annual earnings are higher than PLN 127,000, the tax-free amount disappears. The rules for calculating amenities are presented in the table below:
|Revenue per year||Tax-free amount in Poland in 2017|
|up to PLN 6600||PLN 6600|
|6,601 – PLN 11,000||decreasing from 6600 to 3091 PLN|
|11,001 – 85,528 PLN||PLN 3091|
|PLN 85,529 – PLN 127,000||decreasing from 3091 to 0 PLN|
|over 127 00 PLN||lack|
What is the tax reduction amount for 2017?
The final amount of tax that will go to the Tax Office’s account, apart from deductions and concessions, is also affected by the amount that reduces the tax. After the amendment to the PIT Act, this amount decreases as the taxpayer’s income increases. If you take into account the annual PIT settlement, the amount of tax reduction for 2017 will be calculated using the data from the table below:
|Revenue per year||Tax reducing amount in 2017|
|up to PLN 6600||PLN 1188|
|6,601 – PLN 11,000||PLN 1,188 less the amount calculated according to the formula: PLN 631 PLN 98 × (tax base – PLN 6600) ÷ PLN 4400|
|11,001 – 85,528 PLN||PLN 556.02|
|PLN 85,529 – PLN 127,000||PLN 556 02 gr minus the amount calculated according to the formula: PLN 556 02 gr × (tax base – PLN 85,528) ÷ PLN 41 472|
|over 127 00 PLN||lack|
How do tax breaks and exemptions affect the free amount?
The lower the tax base, the higher the tax reduction amount. One way to reduce cyclical payments to the state is to take advantage of tax breaks and deductions. Income deductions affect the tax base. We are not interested in tax deductions at this time.
Discounts available to taxpayers:
- retirement deductions – the amounts of payments to the Individual Retirement Security Account (IKZE) in the amount not exceeding PLN 5,115.60;
- R&D relief – from 30 to 50 percent costs incurred;
- deduction of ZUS contributions – in the amount of contributions actually paid in a given year;
- return of unduly collected premiums;
- medicine discount – the sum of expenses incurred for this purpose minus PLN 100 for each month;
- church and community donations – up to 6 percent annual income;
- relief for blood donors – up to 6 percent annual income;
- Internet discount – up to PLN 760;
- rehabilitation relief.