Tax card - the simplest form of business taxation
The tax card is one of the simplest forms of business taxation in the Polish tax system. The entrepreneur using the card is not obliged to keep accounts, and the tax he pays is often not high and, additionally, does not depend on the amount of income. It is profitable for companies with few employees. The monthly tax is determined by the head of the tax office, which is guided by the type and scope of business activity, the number of employees, as well as the number of inhabitants of the town where the activity is conducted.
The fact that the amount of tax is not dependent on income can be beneficial for entrepreneurs with high earnings. Unfortunately, in the event of financial difficulties, when a loss occurs in the company, the tax will still have to be paid.
Who can use the tax card?
Pursuant to Art. 23 of the Lump-sum Income Tax Act, it is possible to pay income tax in the form of a tax card on certain income earned by natural persons. Taxpayers who run business activity are entitled to do so:
- service or manufacturing and service,
- service in the field of retail trade in food, beverages, tobacco products and flowers, with the exception of beverages with an alcohol content above 1.5% under the conditions specified in part II of the table in Annex 3 to the Act,
- service in the field of retail trade in non-food products, with the exception of trade in motor fuels, means of motor transport, parts and accessories for motor vehicles, agricultural tractors and motorcycles, and with the exception of trade in non-food products covered by the license,
- catering, if there is no sale of beverages with an alcohol content of more than 1.5%,
- in the field of transport services performed with the use of one vehicle,
- in the field of educational services.
The above-mentioned points also apply to taxpayers operating in the form of a company. However, in their case, the number of partners and employees may not exceed the number of employees indicated in the table in the Annex.
In the case of civil law partnerships, the following activities are excluded from the possibility of using the tax code:
- in the field of selling home meals in apartments, if the sale of beverages with an alcohol content of more than 1.5% is not conducted,
- in professional professions involving the provision of veterinary services by veterinarians, including the sale of veterinary preparations,
- in the field of home care for children and the sick,
- in the field of educational services, which consists in giving lessons by the hour,
- in the professions, consisting in the provision of services in the field of human health protection - under the conditions specified in part VIII of the table;
As part of the Polish Deal, the tax card is to be abolished, you can learn more about it in the article: Tax card abolition - who will remain on it after 2022?
When can a tax card be used?
A taxpayer's activity may be taxed in the form of a tax card in a situation where:
- when running a business, he does not use the services of people not employed by himself under an employment contract, as well as the services of other enterprises or plants, unless these are specialized services (activities and works that fall within the scope of activity other than the reported one and are necessary to perform the product and provide services in a complete manner, including accompanying activities and works),
- they do not conduct, apart from one of the activities listed in art. 23 of the Act on flat-rate income tax, other non-agricultural economic activity,
- when products subject to excise duty are not produced,
- when economic activity is conducted in the territory of the country.
They do not exclude the situation from tax cards when:
- when the taxpayer conducts activities in the field of electricity generation in hydroelectric or wind power plants with a power output of up to 5,000 kilowatts, as well as the production of biogas,
- when revenues are generated from rental, lease, sub-lease or other similar contracts,
and they are subject to separate income tax on general principles
The amount of tax depends on various factors, therefore the taxpayer is not able to determine it on his own. It is mainly influenced by the subject of activity. It is taken into account, inter alia, the number of employees, as well as the number of inhabitants of the town where the business is conducted.
The tax amount is determined top-down, therefore it may change at the beginning of the new year, which will of course be communicated to the taxpayer by the head of the tax office.
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Tax card - rights and obligations
As already mentioned, taxpayers choosing a tax card are exempt from the obligation to:
- keeping books,
- filing tax returns,
- making advance payments for income tax.
However, they are obliged to issue bills and invoices confirming the sale of products, goods or the provision of a service upon customers' request. They should also keep copies of these documents in accordance with the numbering for the period of 5 tax years, counting from the end of the year in which the bill or invoice was issued.
The abovementioned exemptions are not applied in the period before the decision is delivered to the taxpayer (but not longer than 4 months), which determines taxation in the form of a tax card. This applies to taxpayers who start running a business or pay income tax in a different form than a tax card in the year preceding the tax year.
In the event that the income tax was paid in the period before the delivery of the decision on the form of taxation on the principles of a tax card, it is credited towards the tax resulting from this decision.
Choosing a tax card as a form of business taxation
The PIT-16 form serves as an application for taxation in the form of a tax card. It should be submitted no later than on January 20 of the tax year, and if the taxpayer starts running a business during the tax year - before starting the business. The application should indicate one of the activities specified in Art. 23 of the Lump-sum Income Tax Act. It should be submitted to the tax office competent for the location of the organized plant specified in the application to the business register. Otherwise, it may be the place of residence of the taxpayer or the registered office of the company, and ultimately the place of residence of one of the partners.
The head of the tax office, having considered the application, determines the amount of income tax in the form of a tax card by issuing a decision on this matter. If it finds that there are no conditions to apply taxation in the form of a tax card, it issues a negative decision and the taxpayer is then obliged to pay:
- a lump sum on recorded revenues or
- income tax according to general rules, i.e. according to the tax scale.
Tax card - what should you remember?
- the tax should be paid by the 7th day of each month for the previous month; for December to December 28,
- the tax may be reduced by the amount of health insurance paid in the tax year, provided that it is not deducted from income tax; this deduction may not exceed the amount of 7.75% of the basis for assessing contributions,
- the taxpayer is obliged (by January 31 of the year following the tax year) to submit a PIT-16A declaration of the amount of the health insurance premium that was paid and deducted from the tax card in the tax year.