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One of the most significant changes, provided for in the Polish Deal, concerns the elimination of the possibility of deducting health insurance contributions from tax, as well as linking the amount of the contribution for this insurance with the amount of income. In addition, the new law provides for changes in the taxation rules of lump sum tax (lower rates for certain professions), introduction of health insurance contribution for certain streams of income or additional fiscal tools to combat the so-called “gray economy”.
How, then, can the effective taxation of employees income and entrepreneurs change, and what other changes have been envisaged in the field of taxation of personal income.
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The Polish Deal includes proposals of new reliefs and extensions of existing ones for entrepreneurs implementing solutions in the area of innovation. Our experience shows that companies sometimes do not know that they are implementing solutions that qualify for the relief. At the same time, taking advantage of the increased deduction in the field of R&D relief, IP BOX, automation relief or relief for a prototype may give real tax savings and increase the organization's competitiveness on the market.
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The Polish Deal introduces a new tax called the tax on revenues or minimum income tax. Companies with operating tax losses or low tax profitability (share of tax income in tax revenues below 1%) - no matter how much revenue they generate - should pay particular attention to the risk of increased tax burdens.
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As of 2022, a number of companies may be required to analyze the necessity of collecting withholding tax under the new “Pay and refund” mechanism or to pay the so-called tax on ”shifted profits”. The companies that plan to reorganize their activities with the use of mergers, divisions or exchanges of shares, as well as those that use debt financing, both group and third party, should also expect some key changes.
At the same time, Polish Deal introduces some solutions that may increase attractiveness of group consolidation for tax purposes.
What areas of tax settlements may be particularly sensitive to an increase in tax risk and what actions should be taken to ensure tax security in these areas?
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👉Withholding Tax and „Pay and Refund” mechanism
👉 Restructurings and reorganizations
👉 Tax on so-called “shifted profits”
👉 „Hidden dividend” distributions
The Polish Deal provides for new rules that may adversely affect the return on investment in the real estate sector - new regulations on buildings depreciation in real estate companies or the prohibition of tax depreciation of residential properties (as of 1 January 2023) may trigger the need to verify previously assumed and planned ROI calculations.
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When looking for tax savings in the coming years, taxpayers should take particular interest in the range of tax reliefs provided under the Polish Deal. The available reliefs concern both the possibility of tax deferral through the so-called Estonian CIT regime, or actions taken in order to expand business abroad or raise capital by going public. On the other hand, investors planning significant investments in Poland should pay attention to the instrument increasing the tax security of settlements, which is the Investment Agreement.
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👉 Relief for so called “consolidation”
Polish New Deal provides for changes aimed at introduction of income tax reporting in a structured from.
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👉Digitisation of settlements
