Key changes in tax regulations as of 1 January 2019
I. CORPORATE INCOME TAX (CIT)
1. 5% tax rate on income generated by intellectual property rights - IP Box
According to provisions of the Act, eligible intellectual property rights are:

      1. patent right,
      2. protective right to a utility model,
      3. right from industrial design registration,
      4. right from integrated circuit topography registration,
      5. supplementary protection certificate for a patent for a medicinal product or a plant protection product,
      6. right from registration of a medicinal product or a veterinary medicinal product authorized for marketing,
      7. exclusive right referred to in the Act of 26 June 2003 on the legal protection of plant varieties,
      8. copyright to a computer program
which are subject to legal protection under provisions of relevant acts or ratified international treaties to which the Republic of Poland is a party, as well as other international agreements to which the European Union is a party, whose subject of protection was created, developed or improved by the taxpayer as part of his research and development activities.

Income (loss) from an eligible intellectual property right is the taxpayer’s income (loss) earned during a fiscal year:
      1. from fees or payments under a licensing agreement concerning the eligible intellectual property right;
      2. from sale of the eligible intellectual property right;
      3. from the eligible intellectual property right included in the selling price of the product or service;
      4. from damages for infringement of rights arising from the eligible intellectual property right, if obtained in a dispute, including through court litigation or arbitration.
The level of income to be subject to tax relief will be calculated using the statutory formula.
2. Replacement of deductible expenses with expenses for use of cars (depreciation and operating expenses)
Deductible expenses will no longer include depreciation allowances on the value of a car exceeding PLN 225,000 for electric vehicles and PLN 150,000 for other cars. Until 31 December 2018, the limit was EUR 20,000.

The PLN 150,000 car value limit will also apply, as before, to insurance and lease payments in the case of contracts signed after 1 January 2019.

In addition, the cost of private and business use of a car will be reduced by a quarter. The taxpayer will be able to recognize only 75% of such costs as deductible expenses.
3. 9% CIT rate for Small Taxpayers
The current 15% preferential CIT rate for small taxpayers will be reduced to 9%.

Note: When the Small Taxpayer exceeds the EUR 1.2 million of revenue during the year, he will pay tax at the rate of 19% on the total income since the beginning of the year.
4. Changes in tax loss application.
CIT taxpayers will be able to reduce the income from this source one time in one of the next five consecutive tax years by an amount not exceeding PLN 5,000,000, the remaining amount will be applied to income in the remaining years of that five-year period, however the deduction in any one of those years must not exceed 50% of that loss.

This provision does not apply to losses on sale of of virtual currencies for a consideration.

II. PERSONAL INCOME TAX (PIT)


1. 5% tax rate on income generated by intellectual property rights - IP Box
 
The 5% tax rate on income generated by intellectual property rights (IP Box) can also be applied to personal income tax of self-employed individuals. Taxation rules are similar to CIT taxpayers. Detailed accounting records must be kept.
 
2. New rules for the sale of property received as inheritance
 
The new regulations specify that the five year period after which such property may be sold will start at the end of the calendar year in which the property was acquired or built, or property rights were acquired by the heir.
 
3. Housing tax relief
 
The new regulations stipulate that the time limit for using a tax exemption on sale of an apartment or a property right will be extended by 1 year, from 2 to 3 years from the end of the fiscal year in which the property or property rights were sold.
4. Replacement of deductible expenses with expenses for use of cars (depreciation and operating expenses)
Deductible expenses will no longer include depreciation allowances on the value of a car exceeding PLN 225,000 for electric vehicles and PLN 150,000 for other cars. Until 31 December 2018, the limit was EUR 20,000.

The PLN 150,000 car value limit will also apply, as before, to insurance and lease payments in the case of contracts signed after 1 January 2019.

In addition, the cost of private and business use of a car will be reduced by a quarter. The taxpayer will be able to recognize only 75% of such costs as deductible expenses.

An entrepreneur using a private car (not a fixed asset) for business purposes will be able to recognize 20% of operating expenses and the cost of car insurance as tax deductible expenses. From 1 January 2019, he will not be required to keep mileage (“kilometrówka”) records.

Accounting for employee expenses related to the use of private cars for employer’s purposes will remain unchanged.
 
5. Change of dates for filing tax returns
 
Taxpayers will have to file PIT-8C and PIT-11 forms by the end of January following the fiscal year. Tax returns will also be sent to the taxpayer by the end of February following the fiscal year.
 
6. Solidarity tax - an additional 4%
 
This will be an additional personal income tax for those natural persons whose income in the fiscal year exceeded PLN 1,000,000.
 
7. Changes in tax loss application
 
Self-employed CIT taxpayers will be able to reduce the income from this source one time in one of the next five consecutive tax years by an amount not exceeding PLN 5,000,000, the remaining amount will be applied to income in the remaining years of that five-year period, however the deduction in any one of those years must not exceed 50% of that loss.

III. VALUE ADDED TAX – VAT


Bad debts relief
From the 1st of January 2019, if the invoice remains unpaid for at least 90 days special rules apply – creditor is entitled and debtor is obliged to make appropriate corrects. Bad debt relief will be shortened to 90 days – from 150.

The amended regulations will also apply to receivables arising before 1 January 2019, for which the new 90-day deadline expires after 31 December 2018. 

 

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