One of the key changes is the reduction of the basic personal income tax rate from 17 to 12 percent. It will lower the tax-reducing amount to PLN 3,600 per annum. 

There will also be changes in the rules for applying the tax-reducing amount by the remitters, including the possibility of its application by several remitters at the same time, in the case of contractors as well as in the case of employees who simultaneously conduct business activity. 

In addition, applications and statements affecting the amount of advance tax payments are to be submitted not only in writing, but also in any other ways adopted by the remitter. 

We will inform you about other changes to employee taxes separately.

The regulations changing the tax amounts are scheduled to take effect as of 1 July 2022, but are intended to apply to all income taxed according to the tax brackets earned in 2022.

From 1 July 2022, as before, at the taxpayer’s request, the remitter will be obliged to take into account 1/12 of the tax-reducing amount when withholding income tax advance payments, however, this amount will be PLN 300 per month.

If the remitter, from the beginning of 2022, took into account 1/12 of the tax-reducing amount in the current amount each month when collecting advance payments (i.e. PLN 425 per month), up to and including June, the amount of the reduction applied will be PLN 2,550.

As a result, a tax-reducing amount of PLN 1,050 will remain to be used in the second half of the year. At the same time, in 2022, when collecting monthly tax advances, the remitter should take into account the tax-reducing amount only in the part equal to 1/12 of this amount (it cannot be increased or decreased). 

The amendment does not answer the question of how the remitter should meet the obligation to reduce the advance payment by the remaining part of the tax-reducing amount in the second half of the year.

As it seems, in practice remitters will probably deduct PLN 300 each in the next three months (from July to September this year) and the remaining PLN 150 will be deducted by the taxpayer only in his or her annual tax return.

It is unfortunate that this issue has not been recognized and properly regulated - but perhaps this will happen in the course of further legislative work.

However, a number of regulations changing the rules of applying the tax-reducing amount are to come into force as of the beginning of 2023.

In addition to employees, other taxpayers, such as contractors, will be able to apply for a reduction of tax advance withholdings.

Also, the parallel conduct of business activities subject to progressive taxation by the taxpayer will not deprive him or her of the right to request the application of this amount when calculating advance tax payments by the remitter.

In addition, the taxpayer will be able to file a relevant application, at any time during the year, with up to 3 remitters.

In the application, the taxpayer will be required to indicate whether the remitter will be entitled to reduce the advance tax payment by 1/12, 1/24 or 1/36 of the tax-reducing amount, depending on the number of the taxpayer's sources of income.

It should be noted that the total amount of the reduction applied will not exceed PLN 300 per month. 

There will also be no need to request the application of the tax-reducing amount on the PIT-2 form.

The taxpayer will be able to make the appropriate application in writing, as well as by other means accepted by the remitter. This will make it easier to file the applications remotely via means of electronic communication. 

Find more in the PRO HR June 2022.