Abolition relief - since when is the deduction limit?


From 2021, changes have been made to the limit for the deduction of the abolition allowance. Abolition allowance will be limited by the new limit on the deductibility in the annual tax return. However, this will not yet apply to revenues generated in 2020.

Abolition relief - basic information

Poles working abroad for less than 183 days a year are exposed to double taxation. In order to avoid this and not additionally burden citizens, various countries decided to conclude an agreement eliminating double taxation. Abolition relief is aimed at making the tax situation of taxpayers who earn income in countries equal with the unfavorable method of tax avoidance equal to the situation of taxpayers who earn income in countries with a favorable method (exemptions with progression).

Pursuant to Art. 27g of the Income Tax Act, abolition relief is available in the case of income:

  • obtained outside the territory of Poland from sources such as: employment relationship, business relationship, outward work, cooperative employment relationship, business activity and personal activity,

  • from property rights in the field of copyrights and related rights within the meaning of separate provisions, from artistic, literary, scientific, educational and journalistic activities performed outside the territory of the Republic of Poland, with the exception of income (revenues) obtained from the use of these rights or disposal of them.

Abolition allowance - from when to apply the deduction limit?

At the beginning of 2021, new regulations regarding abolition relief came into force. The abolition allowance, described in more detail in the PIT Act, may be deducted in the amount of PLN 1,360. This limit will not apply to the portion of income earned abroad outside the land territory of states.

The new regulations will be applied to the income generated in 2021 (at the time of the annual settlement for 2021, i.e. in 2022). Income achieved in 2020 will be settled in the annual tax return with the application of the full abolition allowance.