Dear Readers,

there is only one month remaining before the announced introduction of the new law regarding lowering the fiscal burden for people below the age of 26 that perform work based on the employment relationship or commission. Admittedly, it is still a draft law, a subject to the Parliament work, however, the new regulations are already formed to the extent which allows the employers to rethink how to adjust to the new provisions.  

In essence, the new tax relief will include revenue from employment and commission work up to 85 528 PLN in a fiscal year. It means that from the revenue below the above mentioned sum, the tax payer will not pay any PIT. The surplus over that sum will be taxed according to the current regulations. In 2019, the limit of the relief will be 35 636.67 PLN.

In 2019, if an individual tax payer submits to the company being a tax remitter a statement that the revenue from 1st of August until the end of year will be tax exempt in full (i.e. will not be higher than 35 636.67 PLN), the tax remitter will not have the duty to calculate and withhold advance PIT payments in this time frame. If a tax payer fails to submit the aforementioned statement, the company will be still responsible for withholding advance PIT payment according to the current regulations, and the tax surplus will be refunded to the tax payer through the yearly tax statement.

Starting in 2020, while calculating advance tax payments, the company will hold a duty of using the tax relief without an obligation for a tax payer to submit a statement.

In the draft law, there is unfortunately no guidance about how turning 26 by the tax payer affects the company’s obligations in a given month and also what the company should do in a situation when the tax payer’s revenue is higher that the limit of the tax relief. 
We would like to draw your attention to the fact that the aforementioned tax relief may sometimes affect the amount of contributions for health insurance required from the employee.

We hope that these gaps will be filled in the scope of further legislative work but we are already available if you would like to discuss with us your doubts regarding the withholding advance tax payments from the income paid out to the employees that are younger than 26 years.

Best regards
Katarzyna Serwińska

CONTACT

Katarzyna Serwińska
Tax Advisor/ Partner
katarzyna.serwinska@raczkowski.eu