Polish Deal – changes in the scope of Polish lump sum tax on registered income

On November 15, 2021 the President signed into law the Act of 29 October 2021 amending the Personal Income Tax Act, the Corporate Income Tax Act and certain other acts (Polish Journal of Laws 2021, item 2105), which is part of the program known as the “Polish Deal” and introduces a number of changes in Polish tax regulations, most of which are to be effective from January 1, 2022 onwards. 

We present the most important changes in the scope of Polish lump sum tax from accounted income introduced by this Act: 

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Changes in the definition of “liberal profession”

Certain professions have been removed from the definition of the liberal profession, i.e. doctors, dentists, veterinary surgeons, dental technicians, feldsher surgeons, midwives, nurses, psychologists, physiotherapists and teachers. These positions will no longer be identified as liberal professions and as a result the flat rate from registered income will change for them.

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Change in flat rates

A tax rate of 14% has been introduced for taxpayers earning revenue from the provision of healthcare services, architectural and engineering services; technical testing and analysis services and specialist design services.

The tax rate of 12% has been introduced for revenue related to publishing of computer game packages (excluding on-line publishing of computer games), system and utility software packages and computer software downloaded from the Internet (excluding on-line downloading of software).

The same flat rate will apply to hardware consultancy services, software-related services covered by the grouping “Computer software originals”, software consultancy services, software installation services and network and information systems management services.

All education services (including services where teachers give their individual lessons) are to be taxed with the unified flat rate of 8.5%.

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Obligation to tax private lease with a lump sum tax on registered income

A new regulation has been introduced, which obliges natural persons who receive income from lease, sublease, tenancy, subtenancy and other contracts of similar nature, to tax such income in the form of a lump sum on registered income. Thus, the possibility of taxing this type of income in accordance with general rules, as defined in the Personal Income Tax Act, has been eliminated.

Taxpayers who earn income from private lease in 2022 may still this year apply the taxation principles valid as at 31 December 2021, i.e. they have the option to tax the lease also in accordance with general principles.

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Changes to the tax card

As of January 2022, the possibility of taxation in the form of a tax card will apply only to persons who, as of 31 December 2021, were taxed with a tax card and intend to continue using this form of taxation. A person who, for any reason, ceases to be taxed with a tax card or loses the conditions for being taxed with a tax card will not be able to return to this form of taxation. The possibility of choosing the tax card for taxpayers who have not previously been taxed in this form has been completely eliminated.

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