A solidarity levy - what is it and how to calculate it?

According to the new regulations, some entrepreneurs will be obliged to pay tribute to the Solidarity Fund. The solidarity levy will cover the revenues achieved from 2019 (and in the following years), and it will be based on a surplus than the value of revenues specified in the PIT Act. How to determine the basis for calculating the solidarity levy, when to submit the declaration and when to pay it? - about it below!

Solidarity levy - legal regulations

The Act of October 23, 2018 on the Solidarity Fund for Support for Disabled People entered into force on January 1, 2019. Pursuant to its Art. 1 state special purpose fund aims to provide social, occupational or health support to people with disabilities. The Solidarity Fund is created partly from the contribution to the Labor Fund paid by the employer (0.15% out of 2.45% - the percentage rate of the Solidarity Fund contribution is determined by the budget act; in 2019 it is 0.15% of its calculation basis), however a significant part of this fund will be made up of a solidarity levy regulated in the Act of July 26, 1991 on personal income tax (hereinafter: the PIT Act), Chapter 6a, Art. 30h and 30i.

Pursuant to the provisions of the PIT Act, a solidarity levy in the amount of 4% of the basis for its calculation, which is a surplus of over PLN 1 million in total income, is required to be paid by natural persons.

Solidarity levy - what is the basis for the calculation?

The basis for calculating the solidarity levy is the surplus of over PLN 1,000,000 in the sum of taxable income, which includes the following income:

• taxed on general principles (Article 27 (1) of the PIT Act),

• taxed with a flat tax (Article 30c of the PIT Act),

• from abroad accounted for using the proportional deduction method only (Article 27 (9) and (9a) of the PIT Act),

• from some capital gains (Article 30b of the PIT Act),

• a foreign controlled entity (Article 30f of the PIT Act).

According to the draft tax explanations available on the website of the Ministry of Finance of March 6, 2019 regarding the application of the provisions on the solidarity levy contained in the PIT Act: "In total, the income includes income shown in the annual PIT-40A tax calculation and in PIT-36, PIT-36L, PIT-37, PIT-38 and PIT-CFC tax returns, for which the deadline for submission is no later than April 30 of the calendar year, and not earlier than May 1 of the previous year. However, it should be stipulated that income from PIT-40A is taken into account only when the tax resulting from this settlement is due tax, i.e. when the taxpayer does not submit a return independently, taking into account the data from this form”.

The solidarity levy covers various types of income, from various sources. This is especially true for people whose income is not all taxed according to the tax scale (see example below).

Example 1.

Let us analyze the situation of three people who obtain income from different sources, taxed at different rates. The table below presents the amount of income obtained in a given year with an indication of the method of its taxation, the calculated income tax and the amount of the solidarity levy. To simplify the calculations, we omit statutory income and tax deductions.

	Mr. Andrzej	Mr. Jan	Mrs. Krystyna
Income - tax scale	PLN 1,500,000	PLN 80,000	- zloty
Income - flat tax	- zloty	PLN 1,420,000	PLN 1,500,000
Total income	PLN 1,500,000	PLN 1,500,000	PLN 1,500,000
Income tax according to the tax scale	PLN 468,026	PLN 13,844	- zloty
Linear income tax	- zloty	PLN 269,800	PLN 285,000
Total PIT	PLN 468,026	PLN 283 644	PLN 285,000
The basis for the calculation of the tribute	PLN 500,000	PLN 500,000	PLN 500,000
A tribute in solidarity	PLN 20,000	PLN 20,000	PLN 20,000
Total Tax	PLN 488,026	PLN 303 644	PLN 305,000

It should be noted that a person who does not achieve income taxed according to the tax scale above PLN 85,528, i.e. does not enter the second threshold of the tax scale - in the example of Mr. Jan and Mrs. Krystyna - may also be required to pay a solidarity levy.

When calculating the basis of the solidarity levy, the following is omitted, not mentioned in art. 30h of the PIT Act, income. The basis for calculating the solidarity levy will not include, in particular, income taxed with a lump sum, as well as income from the sale of private real estate against payment.

Solidarity levy - what can be deducted from the calculation basis?

Pursuant to Art. 30 h of paragraph 1. 2 points 1 and 2 of the PIT Act, the basis for calculating the solidarity levy can be reduced by contributions:

• for social insurance paid in the tax year directly for the taxpayer's own retirement, disability, sickness and accident insurance;

• for social insurance deducted in the tax year by the taxpayer from the taxpayer's funds, it should be noted, however, that the deduction does not apply to contributions the basis of which is tax-exempt income (income) and contributions, the basis of which is income on which, pursuant to the provisions of the Tax Code tax collection was abandoned;

• paid in the tax year from the taxpayer's funds for the compulsory social insurance of the taxpayer or persons cooperating with him, in accordance with the provisions on compulsory social insurance in force in an EU Member State other than Poland or in another country belonging to the European Economic Area or the Swiss Confederation.

In addition, entities that pay tax on the income of a foreign controlled entity in the amount of 19% of the base, may reduce the income constituting the basis for calculating the solidarity levy by the dividend received from the foreign controlled entity already included in the tax base and the income from the sale by the taxpayer of the share in the foreign controlled entity.

Start a free 30-day trial period with no strings attached!

A solidarity levy - a method of settlement

We will pay the solidarity levy for the first time in 2020 on the income earned from January 1, 2019, shown in PIT-36, PIT-36L, PIT-37, PIT-38, PIT-CFC and PIT-40A, the submission deadline of which expires in the period from January 1, 2019 to April 30, 2020 (the above information comes from the draft tax explanations available on the website of the Ministry of Finance of March 6, 2019 regarding the application of the provisions on the solidarity levy contained in the PIT Act).

Natural persons obligated to pay the solidarity levy shall submit the DSF-1 declaration in the amount of the solidarity levy by 30 April of the calendar year and within this period they are obliged to pay the solidarity levy. This position was confirmed by the Director of the National Tax Information in the individual ruling of March 20, 2019, file ref. 0113-KDIPT2-1.4011.620.2018.5.MM: "Natural persons with this obligation [to pay the solidarity levy] shall submit a declaration of the amount of the solidarity levy to the competent tax office by 30 April of the calendar year. The levy payment deadline expires on the same date. For the first time, the obligation to submit a declaration and pay the solidarity levy will take place by April 30, 2020 and will apply to income earned from January 1, 2019.”.

The office competent for submitting the DSF-1 declaration and paying the solidarity levy is analogous to that in the case of personal income tax. The head of a given tax office, after receiving the amount of the solidarity levy from the taxpayer, transfers it to the bank account of the Solidarity Support Fund for Persons with Disabilities, as the levy will be the main source of income for this fund.

The solidarity levy applies only to income earned from January 1, 2019. The first DSN-1 declaration on the amount of the solidarity levy should be submitted to the competent tax office by April 30, 2020 and paid by that date.

The declaration on the amount of the solidarity levy contains data enabling the correct identification of the natural person and the tax office to which the declaration is addressed and the correct settlement of the levy. A draft declaration on the amount of the solidarity levy has been published on the website of the Ministry of Finance - the PIT Act, Art. 30 h of paragraph 1. 5 and 6.