Accounting for PIT for 2020

26 March 2021

The deadline for filing the annual PIT return and payment of the tax by PIT taxable persons expires on 30 April 2021.

Legislative changes vs correctness of the return

Please remember about changes made to law in 2020 which have an impact on the correctness of the return.

1. Tax rates:
   a. 17% – the new lower rate is applicable to income not exceeding the first tax bracket, i.e. 85,528.00 Polish zloty;
   b. 32% – applicable to income above the 85,528.00 Polish zloty.
2. Tax-deductible costs:
   a. 3,000 Polish zloty, 4,500 Polish zloty, 3,600 Polish zloty, 5,400 Polish zloty – among others, in connection with the employment relationship (depending on the number of jobs and the registered office of the employer);
   b. 20% – in respect of activity conducted personally;
   c. 50% – in respect of earning income from, among others, copyrights.
3. Solidarity tax – it is an additional amount payable by taxable persons earning an income of more than 1 million Polish zloty. The solidarity tax is 4% of the excess over 1 million Polish zloty (important – paid social insurance contributions are to be deducted from the taxable base) and it is payable within the same deadline as PIT.

Agreement between Poland and Germany on cross-border workers

An agreement between Poland and Germany has been in force since 11 March 2020 which applies to cross-border workers who exercised employment at home due to measures taken by the Polish or German Government to combat the COVID-19 pandemic.

Pursuant to the agreement, the employment exercised by the worker at home (that is, in his/her country of residence) for the employer from the other state may be deemed the employment exercised in the state in which the worker would have exercised the employment if it were not for the anti-crisis measures.

This does not apply to:

1. workers exercising employment from home (home office) from the country of residence or a third state which would have been exercised in this way regardless of the crisis caused by the pandemic, and
2. workers who are obliged to exercise their employment at home from their country of residence under their contracts of employment.

Tax credit

Since 1 January 2020, tax credit method should be used to calculate tax on income earned by Polish tax residents in: the United Kingdom, Finland, Ireland, Israel, Japan, Lithuania, New Zealand and Slovakia.
Since 1 January 2021 this method should also be applied when calculating income earned in: Belgium, Denmark, Norway, Portugal and Canada.

Note! Tax abolition relief was significantly changed on 1 January 2021 – the new maximum amount of tax-deductible tax abolition relief is 1,360 Polish zloty. The limitation is applicable to income earned since 1 January 2021. When it comes to income earned in 2020, an unlimited tax abolition relief may be applied in this respect.