Poland: Important Tax Changes for 2022
In November 2021, The President of Poland signed the so-called Polish Deal, which includes several important tax-related changes set to take effect on January 1, 2022. The changes will affect several areas of taxation including corporate income tax, value added tax, personal income tax and more.
Some of the key changes include:
- The annual tax-exempt amount will increase from PLN 8,000 to PLN 30,000. As a result, the monthly tax relief will increase from PLN 43.76 to PLN 425. This change is only available to taxable persons taxed on the tax scale.
- The income limit above which a higher tax is paid has increased from PLN 85,528 to PLN 120,000 per year.
- New tax bands with two thresholds: 17% up to PLN 120,000 and 32% above this amount.
- The annual Social Insurance Contributions base limit will increase from PLN 157,770 to PLN 177,660
- The limit for employees under the age of 26 remains the same, at PLN 85,528.
Furthermore, according to the new legislation, health insurance contributions are no longer deductible from Personal Income Tax (PIT). This change results in an effective 7.75% increase in the assessment base for all those paying the monthly contribution.
To minimize the adverse effects of PIT growth, tax relief will be offered for the so-called middle class.
Tax Relief: To minimize the adverse effects of PIT growth, tax relief will be offered for the so-called middle class. The changes include the following provisions:
- Relief will be offered for taxpayers whose annual revenue totals from PLN 68,412 up to PLN 133,692.
- Employees who exceed the yearly tax amount of PLN 133,692 can submit a signed statement if they do not want to claim the middle-class tax relief in that particular year.
- In cases where the middle-class tax relief is not applicable in a given year, and the amount is less than PLN 133, 692, the tax authorities will refund the overpaid tax.
- Employees must return Personal Income Tax to the Polish tax authorities if their annual income exceeds PLN 133,692.
- The amount of middle-class tax relief is computed on an individual basis. It will be calculated automatically for all employees whose monthly income falls within the ranges of PLN 5,701 and PLN 11,141.
Employees should assess their annual income and other perks in January to see if they qualify for middle-class tax relief.