Tax card and terms of use

One of the possible forms of taxation of business activity is a tax card. It has many advantages and is the simplest form of taxation. It can be chosen by both individual entrepreneurs and those operating in the form of a civil partnership.

Tax card and the amount of tax

Entrepreneurs who use this form of taxation are required to pay a fixed amount of tax to the tax office every month. This amount is usually quite low and does not depend on the income obtained. The amount of tax depends on:

• type of business,

• the number of inhabitants of the commune in which the activity is conducted,

• the number of employees employed.

When choosing a tax card as a form of settlement, there is no obligation to keep accounting or submit a traditional PIT declaration.

The government plans to abolish the tax card. Read more on the topic: Removal of the tax card - who will stay on it after 2022?

Disadvantages of the tax card

The tax deduction card, however, has disadvantages. Cart goers must bear in mind that even if the company does not make a profit or suffers a loss, they will be required to pay tax. Moreover, they will not be able to settle this loss in the following years.

Another inconvenience that holders of a tax card may face is the issue of taking out a loan. The problem is the bank's inability to assess creditworthiness, because it does not know the actual income of the entrepreneur.

Tax card rates in 2021

The tax card rates for 2021 were included in the announcement of the Minister of Finance, Funds and Regional Policy of November 5, 2020 on the tax card rates and the amount to which benefits may be provided in the provision of certain services, with the exception of benefits for the public, and quarterly lump sums on the revenues of parish priests and vicars, applicable in 2021.

Conditions for using the tax card

Business owners who want to pay with a tax card must meet the following conditions:

• they do not conduct any other non-agricultural business activity,

• the entrepreneur's spouse does not conduct business activity to the same extent,

• do not use the services of persons employed by them only, with the exception of specialist services,

• they do not produce products taxed on the basis of separate excise duty regulations,

• operate on the territory of the Polish state.

In addition to the above-mentioned criteria, the activity conducted by the entrepreneur must come from the scope of twelve departments listed in the Notice of the Minister of Finance, that is:

• service and manufacturing and service activities,

• food, drink, tobacco and flower retail services,

• non-food retail trade services,

• gastronomy,

• transportation services,

• entertainment services,

• selling home meals in apartments,

• professional health care professions, e.g. doctor, nurse,

• free professions - providing veterinary services,

• home care for children and the sick,

• educational services - giving lessons by the hour,

• services of natural persons, referred to in art. 23 sec. 1a of the Act.

How to choose a tax card?

In order to be able to settle accounts with the tax authorities with a tax card, in addition to carrying out one of the above-mentioned activities, the taxpayer must meet several other conditions.

You should notify the competent head of the tax office about the intention to settle the tax with a tax card by completing the PIT-16 application. This action must be ensured by January 20 - this deadline is a deadline. There is no need to confirm your choice the following year. Only when the entrepreneur wants to change the form of taxation, he must notify the tax office about it.

If the entrepreneur starts business during the year, he also has the option of using a tax card, but must report it in the CEIDG-1 form.

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Tax card - important dates

During the tax year, the tax must be paid monthly, at the latest by the 7th day of a given month for the previous month. In December, the fee should be paid by December 28 of the tax year.

After the end of the tax year, the taxpayer is required to submit a PIT-16A declaration to the competent tax office by January 31.

Resignation from the tax card

In a situation where the entrepreneur wants to change the form of taxation, he must notify the tax office about this fact. Such a declaration must be submitted by January 20 of the following tax year.

The right to settle with the tax card can also be waived earlier. It is possible after receiving a decision on the amount of tax. However, no later than 14 days from the delivery of such decision.

Loss of the right to the tax card

If a taxpayer does not comply with the requirements of keeping a tax card, he may be deprived of the right to use it by the tax office. This situation may arise if:

• false data were provided in the application, which means that the tax is paid in the wrong amount and form,

• the tax office has not been notified within 7 days of significant changes that affect the amount and form of taxation,

• products subject to excise duty will be produced,

• the permissible level of employment is exceeded.

If the above-mentioned situation occurs, the decision on taxation in the form of a tax card expires. The taxpayer's obligation is then to set up a tax book of revenues and expenses and to pay income tax for the entire year on general terms.