Personal activity versus business activity
A person obtaining income from a specific source should, as a rule, settle it before the tax office. However, the problem may arise when it is not known to what specific source the income should be assigned, and thus - what taxation rules to apply. Recently, many doubts have arisen in a situation where the performance of an appropriate activity may be perceived as both a personal activity and a non-agricultural economic activity. One of such sources are the revenues obtained by, inter alia, athletes, artists, scientists and journalists.
Sources of income - the PIT Act
The Personal Income Tax Act clearly defines the sources from which the taxpayer can obtain income. According to Art. 10 sec. 1 are:
- service relationship, employment relationship, etc .;
- activities performed in person;
- non-agricultural economic activity;
- special departments of agricultural production;
- rental, sublet, lease, sublet;
- money capitals and property rights;
- paid disposal of, among others real estate or parts thereof, cooperative ownership right to a flat or business premises, perpetual usufruct right to land and other things - if it was not performed as part of business activity.
However, it is worth adding that this catalog is not closed, therefore, they are not the only possible forms of earning income.
Activities performed in person - sources of income
It is important for the taxpayer to be able to distinguish between activities carried out in person and other activities. As it turns out, the legislator clearly defined what types of activities performed fall within the scope of a given source of income. Among those listed in Art. 13 can be distinguished:
income from personally performed artistic, literary, scientific, coaching, educational and journalistic activities, including in the field of science, culture and art, journalism and income from practicing sports, sports scholarships awarded on the basis of separate regulations, as well as judges' income from running competitions sports,
revenues from the performance of services on the basis of a mandate contract or a specific specific task contract, obtained only from:
a natural person conducting business activity, a legal person and its organizational unit as well as an organizational unit without legal personality,
the owner (holder) of the real estate in which the premises are rented, or the manager or administrator acting on his behalf - if the taxpayer provides these services only for the purposes related to the real estate
- with the exception of revenues obtained on the basis of contracts concluded as part of non-agricultural business activity conducted by the taxpayer;
revenues earned on the basis of enterprise management contracts, managerial contracts or contracts of a similar nature.
As can be seen, the regulations do not provide a precise definition of activities performed in person, and the act only lists the exact types of income belonging to a given source. In some cases, this is problematic, as there are occasions when an activity performed in person can also be performed in the course of a business.
Economic activity - definition
Contrary to the activity performed personally, economic activity has its exact definition in the regulations. Well, it is any gainful activity:
- manufacturing, construction, commercial, service,
- consisting in searching for, identifying and extracting minerals from deposits,
- consisting in the use of things and intangible assets,
- conducted on its own behalf, regardless of its result, in an organized and continuous manner, from which the revenues obtained are not included in revenues from other sources (listed in Article 10 (1)).
It is also worth mentioning the premises of Art. 5b paragraph. 1, the joint fulfillment of which excludes the recognition of given activities as an economic activity, namely:
- responsibility towards third parties for the result of given activities and their performance, with the exception of torts, shall be borne by the principal,
- activities are performed under the direction, as well as in the place and time designated by the client;
- performing the given activities does not bear the economic risk related to the activity conducted.
Personal or business activity
The subject of many interpretations and court judgments were matters concerning the assignment of activities performed by taxpayers to the appropriate source. The main problem was whether the revenues obtained from activities performed personally can be classified as economic activities, if the conditions for this are met. The advantage of such a solution would be taxing income with a flat tax instead of a progressive tax (tax scale), thanks to which, after exceeding the threshold, the taxpayer would pay 19% of the tax - not 32%.
According to the jurisprudence, tax authorities and courts were not favorable to taxpayers, claiming that if a given activity was assigned by the legislator to an activity performed personally, it cannot be performed as a non-agricultural economic activity. An example of such jurisprudence is the judgment of the Supreme Administrative Court of April 8, 2014 (file reference number II FSK 1125/12) on a taxpayer earning income from participation in speedway competitions.
In response to the confusion, the Ministry of Finance issued a general ruling (No. appropriate conditions provided for by the Act.