The simultaneous use of certain tax credits and 50% deductible costs requires an individual approach | PRO HR Alert
The tax exemptions referred to in Article 21(1) of the PIT Act in Section 152 (for persons transferring their place of residence to Poland), Section 153 (for parents or legal guardians of at least four children) and Section 154 (for working seniors) apply to income from employment relationships, from contracts of mandate, from non-agricultural business activity and maternity allowance. The so-called PIT- 0 for young people referred to in section 148 covers income from employment contracts, mandate contracts, graduate traineeships, student internships and maternity allowance. Among these incomes, there is no income from the transfer or use of property rights (including copyrights). This may lead to doubts as to whether, in a case in which, for example, a contractor receives a fee for the transfer of copyright, this fee may be covered by one of the above-mentioned tax exemptions.
The position on this issue was taken by the Director of the National Fiscal Information, who stated in the individual interpretations issued that if the commissioning agreement does not distinguish between the basic remuneration for the commission and the fee for the transfer of copyrights to works, this remuneration should not be qualified to the source of revenue, which is assets rights. On the other hand, the contractually separate remuneration paid to authors for copyright, including the remuneration for the transfer of such rights against payment, will as a rule constitute revenue from assets rights for such persons, and not from a commission agreement.
The above leads to the conclusion that, in the opinion of the authority, the above-mentioned tax exemptions do not apply to the separate income from the transfer of assets rights if such transfer is made on the basis of a contract of mandate. This means that the royalty should not be included in the calculation of income covered by these exemptions.
So far, we have not noted the issuance of a similar interpretation in relation to persons receiving a separate royalty under an employment contract. However, despite our doubts as to the correctness of the above interpretation, it is conceivable that the position of the authorities may be similar.
As a precaution, it may be considered that, in the case of employees receiving a royalty and benefiting from these tax exemptions, only the part of the remuneration that the employees receive for the performance of their duties as employees (and not the royalty) should be included in the exempted income, and the 50% royalty costs should be applied to the royalty. Alternatively, waive the separation of the royalty from the employee's total remuneration and apply the aforementioned exemptions to the total remuneration until the limit is exhausted. Finally, in some cases, it is possible to apply only 50% of the royalty costs (without the aforementioned reliefs) without harming the employee's annual net income. However, due to the diversity of individual cases, the decision should be made on a case-by-case basis.
We would like to remind you that the total amount of 50% tax deductible costs for the transfer of rights and the use of the above-mentioned tax exemptions may amount to no more than PLN 120,000 per year.
Should you have any questions regarding the above, please contact us