In this edition:
- Minimum wage.
- Tax-free exclusion.
- Change in limit of revenue-earning costs for creatives.
- Limits on tax exemptions.
- Income from shares received in incentive programmes.
The government raised the minimum monthly wage from PLN 2,000 to PLN 2,100. The minimum hourly rate for civil contracts also rose from PLN 13.00 to PLN 13.70.
The increase in the minimum wage directly translates into an increase in other benefits. Thus there was an increase in:
- Severance for staff laid off in the group procedure (15 times the minimum monthly wage)
- Supplement for working at night
- Salary for being on-call and for down-time
- Compensation awarded by the labour court for discrimination in hiring, mobbing, and job discrimination
- Minimum basis for sick pay
- Amount of wages exempt from garnishment.
Legal basis: Minimum Wage Act of 10 October 2002 (Dz.U. 2017 item 847).
The amount of the annual income exclusion for personal income tax was raised as of 1 January 2018 from PLN 6,600 to PLN 8,000. This means an increase in the amount of income for which taxpayers will not owe any income tax.
The full benefit from this change will be felt only by persons with very low annual income, not exceeding PLN 8,000. For those earning PLN 8,000–13,000, the exclusion will decline pro rata as income rises, from PLN 1,440.00 to PLN 556.02.
The tax-free exclusion for taxpayers with annual income in the range of PLN 13,000–85,528 will remain unchanged at PLN 556.02. For incomes above PLN 85,528, the exclusion will drop to zero at an income of PLN 127,000.
CHANGE IN LIMIT OF REVENUE-EARNING COSTS FOR CREATIVES
An amendment to the Personal Income Tax Act doubled the limit on deductible revenue-earning costs for creative professions.
Artists and other creative professionals have been entitled to claim a flat rate of deductible revenue-earning costs of 50% of their income, but no greater than PLN 42,764. The amended act raises the cap on revenue-earning costs for creatives to the upper limit of the tax bracket, i.e. PLN 85,528 per year. Above that limit revenue-earning costs will not apply as they will be zero.
The act also includes a fixed list of professions eligible to claim these increased revenue-earning costs, such as:
- Authors of literature
- Visual artists
- Actors and directors
- Creators of audiovisual and journalistic works
- Creators of computer programs
- Performers of R&D or scientific and instructional activity.
LIMITS ON TAX EXEMPTIONS
The Personal Income Tax Act introduces new, higher limits on tax exemptions from January 2018.
These limits are raised for:
- Relief for fortuitous events not covered by the Workplace Social Benefit Fund (ZFŚS), from PLN 2,280 to PLN 6,000 (Art. 21(1)(26)(b) of the PIT Act), and without limit if covered by ZFŚS
- Benefits from the workplace for pension-ers and survivors of deceased employees or deceased pensioners, from PLN 2,280 to PLN 3,000 (Art. 21(1)(38) and (92))
- Benefits from ZFŚS, from PLN 380 to PLN 1,000 (Art. 21(1)(67))
- Benefits for childcare at day-care centres and preschools not covered by ZFŚS, from PLN 200/400 to PLN 1,000 per child (Art. 21(1)(67b))
- Holiday supplements for children up to age 18 not covered by ZFŚS, from PLN 760 to PLN 2,000 per month (Art. 21(1)(78)(b)).
Legal basis: Act of 27 October 2017 Amending the Personal Income Tax Act, the Corporate Income Tax Act, and the Act on Flat-Rate Tax on Certain Income Earned by Natural Persons (Dz.U. 2017 item 2175).
INCOME FROM SHARES RECEIVED IN INCENTIVE PROGRAMMES
From 2018, income from shares or derivative instruments acquired as an unpaid benefit or an in-kind benefit will be attributed to the source to which the income from such unpaid benefit or in-kind benefit is attributed.
In the case of employees, this will mean (for example) that such income will be attributed to the employment relationship and taxed at the tax scale for ordinary income. Significantly, tax-able income will be recognized upon sale of such shares. However, given the new approach to this issue, it may be suggested that an individual interpretation be sought in each case.
This change expands the scope of entities covered by these regulations. In place of the earlier limitation to firms from the European Union or the European Economic Area, such incentive programs may also apply to companies from countries with which Poland has signed a tax on avoidance of double taxation. A person covered by the program must be connected to the company by a direct relationship (employment contract or personal service contract), but the incentive program may also be created by a parent company.
The concept of an “incentive program” has also been defined, as “a system of compensation established pursuant to a resolution of the general meeting, under defined rules, as a result of which persons eligible for such benefits, directly or as a result of exercise of rights under derivative financial instruments, rights to securities, or other property rights, acquire the right to take up or acquire shares of the company to which they are connected by an employment relationship or civil-law relationship, or the shares of a company controlling such company.”