Forms of taxation of economic activity in Poland
Business entities obtaining income from business activity conducted in Poland are obliged to pay income tax on this account.
Persons who have legal personality - limited liability companies as well as joint-stock companies pay the corporate income tax - CIT (the Corporate Income Tax Act). As a rule, they are subject to only one, 19% tax rate. It is paid in this amount regardless of the income achieved, the size of the company or the type of business.
Forms of taxation of personal income tax
Entrepreneurs who are natural persons, under the provisions of the Personal Income Tax Act - PIT, are also required to pay income tax. However, they can choose one of the following forms of taxation:
- general principles - according to the tax scale 18% and 32%,
- flat tax - 19%,
- lump sum on recorded revenues,
- tax card,
- tonnage tax.
The choice of the form of taxation
The taxpayer has time to choose the appropriate form of taxation:
- until January 20 of the tax year - in the case of persons continuing their business,
- until the date of submitting the application for entry in the Central Register and Information on Economic Activity, in which he chooses the form of taxation - in the case of starting a business,
- until the commencement of business activity, in the case of a tax card or until the date of obtaining the first income in other cases - if the form of taxation has not been selected in the application for entry in the CEIDG.
It is important that the chosen billing method is valid throughout the year.
Changing the form of taxation
According to the regulations, the selected form of taxation should be applied throughout a given tax year. In practice, however, there are cases where a change in the form of taxation during the year is possible or even necessary. These are situations when a taxpayer loses the right to settle accounts with the form of taxation chosen by him under statutory provisions. When a taxpayer decides to change the form of taxation of income from activity, he should report the change by January 20 of the new tax year from which the change is to take place.
Choosing how to pay tax
Once the entrepreneur chooses the appropriate form of taxation, there is still a question of choosing the method of taxation. This is important as it can significantly affect the financial liquidity of the taxpayer.
And so, there are the following ways to pay income tax:
- quarterly (sometimes allows you to defer the tax payment deadline), or
- in a simplified form.
Monthly advances on the actually obtained income is the basic method of paying income tax by taxpayers running a business (Article 44 (1) (1), (3), 3f and 6 updof). Their duty is to calculate and pay to the account of the competent office a monthly advance on income tax by the 20th day of each month for the previous month. The basis for calculating the advance payment is income less the deduction indicated in art. 26 updof.
Both in the case of general rules and in the case of flat tax, advance payments for income tax are calculated in a cumulative manner from the beginning of the year. However, in the case of a lump sum on recorded revenues, they are calculated specifically for a given month.
Taxpayers paying tax in the form of a lump sum on recorded income are obliged to pay it to the account of the tax office by the 20th day of the following month, while for December the tax payment deadline is exceptionally due on January 31 of the following year (Article 21 (1 of the Act on flat-rate income tax on certain revenues earned by natural persons) - this is the final date for submitting a tax declaration.
Quarterly advances on business income can be chosen by taxpayers who have adopted a tax scale or a flat tax - 19% as a form of taxation and:
1. have the status of the so-called a small taxpayer, so their income for the previous year did not exceed PLN 4,922,000 or
2. started their activity in 2013; a person starting a business activity is not considered to be a person who, in the year of commencement of business activity (i.e. in 2013) and in the period of two years, counting from the end of the year preceding the commencement year:
- independently conducted business activity or as a partner of a company without legal personality,
- the activity was conducted by the taxpayer's spouse, provided that there was joint property between them (Article 44 (3g and 3h of the updof)).
The competent head of the tax office should be notified about the selection of the quarterly advance payment for income tax. In the case of a small taxpayer, this obligation should be fulfilled by February 20 of the tax year. On the other hand, a person who starts business during the tax year is obliged to submit a notification by the day preceding the day of commencement of business activity, but not later than on the day of obtaining the first income (Article 44 (3) and updof).
A taxpayer starting a business may submit a choice of quarterly settlement already when submitting an application for entry in CEIDG-1 by filling in the appropriate fields.
Quarterly advances are paid to the account of the tax office by the 20th day of the month following the quarter for which the advance is paid. So an advance payment for:
- Q1 - it pays off until April 20,
- 2nd quarter - until July 20,
- 3rd quarter - until October 20,
- IV quarter - until January 20.
If the advance payment deadline falls on a Saturday or a public holiday, it is postponed to the first working day following the holiday.
Pursuant to Art. 44 sec. 6b-6e updof, advance income tax in simplified form may be paid by persons who pay tax on their operating income according to the tax scale or a flat tax - 19%, except for taxpayers who started their business for the first time in the tax year or in the year preceding the tax year and those who in annual settlements from the previous two years did not show any non-agricultural business income subject to taxation.
A taxpayer who uses the simplified form of making advance payments for income tax for the first time is obliged to notify the head of the tax office in writing of the choice of this form by February 20 of the tax year. If, after a few years, he would like to resign from this method of paying tax advances, he should also notify the competent head of the tax office in writing of a change in his decision by February 20 of the tax year.