As of 2021, the legislator decreased the rates of lump sum PIT. For most of the taxpayers, it was not enough to change their PIT settlement method. However Polish “Governance” Act may be a deal-breaker in this respect – due to the introduction of 4.9% health insurance contribution calculated on actual income effective burden rate of taxpayers subject to linear taxation will increase from 19% to 23.9%. On the other hand in the case of lump-sum taxpayers, health insurance contribution will be also charged as a lump sum and should not exceed PLN 1k monthly. This makes the lump sum method of settlements even more profitable. Moreover, revenues subject to lump-sum taxation are not subject to a 4% solidarity charge.
What is the difference in net revenues between these two methods of PIT taxation? We have assumed that the taxpayer currently subject to 19% linear PIT recognized monthly 5k PLN as tax-deductible costs and may opt to apply 17% lump-sum tax applicable for revenues from so-called professional services. Depending on the type of services rendered lower lump sum PIT rate may be applicable which would increase tax savings.
Below we present a comparison of net revenues, depending on the level of remuneration
Should you have questions, please contact us:
Head of Tax, Board Member
Tax Manager – Attorney-at-law