TAX CHANGES in 2021
TAX CHANGES in 2021
- Corporate income tax (CIT)
- Estonian CIT – The most important advantage of the "Estonian" taxation model is the deferral of taxation of the company's profits until the profit is distributed to the partners. In order to benefit from this flat-rate tax you must inform the Tax Office. Additionally, the following conditions, for example, must be met: Employing at least 3 staff members, payment of remuneration in the amount of at least three times the average monthly salary in the enterprise sector. The taxpayer may not hold shares in the capital of another company, the taxpayer will incur capital expenditure in the amount higher by 15% but not lower than PLN 20,000 over 2 consecutive tax years or by 33% but not lower than PLN 50,000 over the period of 4 tax years. The reference basis is the initial value of the fixed assets owned by the taxpayer (excluding cars, aircraft, yachts). The shareholders of such a company will have to send additional information about completed transactions to the tax office.
- The fund for investment purposes is intended to ensure the possibility for the taxpayer to accumulate their own funds for future investments as specified in the act. The taxpayer will be able to include the allocations for this investment fund from the profit for the previous year as tax deductible expenses without the obligation to spend these funds.
- Small taxpayer in 2021 – a company whose sales revenue including VAT in 2020 did not exceed EUR 2 mln, which is equivalent to PLN 9,031,000. This limit was increased from EUR 1.2 million.
- Taxation with CIT tax – limited partnerships and certain general partnerships. As of 2021, limited partnerships have been subject to corporate income tax and the same rules apply to them as to limited liability companies or joint-stock companies. Partners of a limited partnership, and in some cases partners of a general partnership obtaining revenues from participating in these partnerships will tax these revenues in the same way as revenues in capital companies (dividend). Limited partnerships (partners) had the possibility of extending the financial year of the limited partnership until April 30, and thus the provisions on taxation of the CIT limited partnership apply from May 1, 2021. The tax rate is 9% for small taxpayers or 19% if the limited partnership's sales exceeded EUR 2 mln in 2020.
- 9% CIT rate. The 9% CIT rate may be applied to income derived by CIT taxpayers starting their business activity and small taxpayers.
- Shifting the compulsory collection of withholding tax and its payment to the Tax Office if the total amount due to a given taxpayer in a year exceeds PLN 2 mln. The effective date of these regulations has been postponed to June 1, 2021.
- Real estate company and taxation of sale of shares in this company by a foreign entity – Income earned in the territory of the Republic of Poland by non-residents is also considered to be income from the transfer of ownership of shares, all rights and obligations, participation titles or rights of a similar nature in a real estate company. A real estate company is a company in which at least 50% of the market value of assets constituted, directly or indirectly, the market value of real estate located in Poland or rights to such real estate, and the market value of these properties exceeded PLN 10 mln or its equivalent.
- Flat-rate tax on recorded revenue without deductible costs
- Increasing the revenue limit to EUR 2 mln, defining more liberal professions, reducing tax rates for certain types of business activity. For example, from 20% to 17%, from 17% to 15%. In the case of rental income, whether it is carried out as part of business or independently, the tax rate will amount to 8.5% for income totaling up to PLN 100,000 and 12.5% if this amount is exceeded.
- Value-added tax (VAT)
- Small taxpayer for VAT purposes – a limit of EUR 1.2 mln. In the case of tax on goods and services, the limit has remained unchanged compared to the CIT Act. A small VAT taxpayer can employ the cash accounting scheme and settle accounts on a quarterly basis.
- Extension of the deadline for deducting VAT. From January 1, 2021, the right to deduct tax was extended by 1 additional tax period to 4 months. Until now, it has been a 3-month period (three settlement periods).
- Change in the settlement of correction invoices. In order to lower the tax base, it will no longer be required to receive a confirmation of receipt of a correction invoice. As of 2021, it is sufficient to obtain a confirmation of agreement with the other party (the buyer of goods or services), of the the reduction of the tax base – the price and that the conditions for the reduction have been met. It is necessary to have documentation confirming the joint determination of the reduced tax base.
- The limit on gifts of small value increased to PLN 20. Earlier, it was PLN 10.
- Taxpayers providing construction services may submit quarterly declarations.
- Change in the Classification of Goods and Services. As of 2021, for the purposes of VAT and determining goods and services, the 2015 Polish Classification of Products and Services (PKWiU) shall apply. Previously, it was the 2008 version of PKWiU.
- Other changes
- The minimum remuneration for work is PLN 2,800. It was increased by PLN 200.
- The minimum hourly rate for contractors / employees amounts to PLN 18.30.
- Obligation to report specific work contracts to the Social Insurance Institution (ZUS).
- Change in the competences of tax offices from January 1, 2021.
- The provisions specifying the competences of specialized tax offices have changed as follows:
- One tax office in the country is dedicated to the largest taxpayers and this will be the First Masovian Tax Office in Warsaw,
- The so-called "large tax offices" will focus on large economic entities with income above EUR 3 million,
- "Small" companies with foreign capital have returned to the remaining "small" tax offices,
- The Lublin Tax Office in Lublin will be dedicated to handle the flat-rate corporate income tax collected by taxpayers from non-residents,
- The head of the Third Masovian Tax Office in Radom will be in charge of corporate income taxes obtained by non-residents.
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