Objective exemptions in the PIT Act

The Personal Income Tax Act provides for a number of exemptions from this tax regarding selected income indicated by the Act. They include subjective and objective exemptions.

For various reasons, the legislator decides to exempt certain types of income from income tax. This may be due to social protection or economic reasons. The subject exemptions in this respect are regulated by the Act of July 21, 1991 on personal income tax. The list of income that is exempt from PIT taxation is indicated in art. 21 sec. 1 above act.

The redundancy catalog contains over 130 items. Among them, we can distinguish those that relate to income, e.g. of a compensation or social nature, some income related to the capital and property rights held, or business activity, as well as prizes and prizes.

Income of a social nature

Among the income of a social nature, the legislator exempted from taxation, among others:

8) family benefits received under the provisions on family benefits, family and care allowances, cash benefits received in the event of ineffectiveness of the enforcement of maintenance payments and childbirth allowances received under separate provisions,
24) granted, on the basis of separate provisions, financial aid for foster families and one-off financial aid for management, granted to foster children who become independent and to foster children of public or private care and educational institutions,
26) allowances received in the case of individual random events, natural disasters, long-term illness or death - up to the amount not exceeding PLN 2,280 in the tax year, subject to points 40 and 79,
79) social assistance benefits,
127) alimony:
a) for children who are under 25 years of age and for children regardless of age, who, in accordance with separate regulations, receive a care allowance (supplement) or a social pension,
b) for the benefit of persons other than those mentioned in point (a). a, received on the basis of a court judgment or court settlement, to the amount not exceeding PLN 700 per month.

Compensation income

Income of a compensatory nature is also exempt, i.e .:

3) received compensation or redress, if their amount or the rules of determining result directly from the provisions of separate acts or executive regulations issued on the basis of these acts, with the exception of:
a) severance pays and compensations specified in labor law for shortening the notice period for an employment contract,
b) severance pay paid on the basis of the provisions on special rules for terminating employment relationships with employees for reasons not related to employees,
c) severance pay and compensation for the shortening of the notice period for officers remaining in a service relationship,
d) damages awarded under the provisions on non-competition,
e) compensation for damages to assets related to the conducted business activity,
f) compensation for damage to assets related to the running of special departments of agricultural production, the income of which is taxed according to the scale referred to in Art. 27 sec. 1, or on the terms referred to in Art. 30c,
g) damages resulting from concluded contracts or settlements other than court settlements,
3a) compensation or redress received on the basis of the provisions on declaring invalid judgments issued against people repressed for activities for the independent existence of the Polish state,
3b) other damages or redress received on the basis of the judgment or the court settlement up to the amount specified in the judgment or the settlement, with the exception of damages or redress:
b) regarding the benefits that the taxpayer could achieve if the damage had not been done to him,
3c) compensation in the form of pensions received under the provisions of civil law in the event of bodily injury or health disorder caused by an injured party who has lost all or part of his earning capacity, or if his needs have increased or the prospects for future success have decreased,

3d) compensation received under the provisions of the geological and mining law,
29) compensation paid pursuant to the provisions on real estate management; this does not apply to cases where the owner of the real estate referred to in the first sentence acquired its property within 2 years before the initiation of expropriation proceedings for a price lower by at least 50% than the amount of compensation obtained for the purposes justifying its expropriation,
30a) revenues obtained from:
a) the exercise of the right to compensation under the Act of 2005 on the Exercise of the Right to Compensation for Leaving Real Estate Outside the Current Borders of the Republic of Poland by persons entitled under this Act,
b) sale of real estate or the right of perpetual usufruct, acquired in connection with the exercise of the right to compensation referred to in point (a). and, up to the amount corresponding to the percentage of the value of this compensation in the price of the property or the right of perpetual usufruct on the date of acquisition of the property or the right of perpetual usufruct,
106) compensation received on the basis of a resolution of the United Nations Security Council, paid to persons injured as a result of hostilities in Kuwait;
120) compensations paid, on the basis of court judgments and concluded agreements (settlements), to the owners of the land included in the agricultural holding, for:
a) establishing a land easement,
b) land reclamation,
c) damage to agricultural crops and forest stands
- as a result of investment in the construction of crude oil transmission infrastructure and refined petroleum products and the construction of technical infrastructure facilities referred to in Art. 143 paragraph 2 of the Act of 1997 on real estate management.

Income obtained from equity and copyrights

Exemptions related to income obtained from the capital held and property rights

The following are exempt from PIT tax:

5a) amounts returned by the investment fund society in connection with the expiry of the authorization to establish an investment fund - in the amount of contributions made to the fund,
28) income obtained from the sale of all or part of the real estate included in the agricultural holding; the exemption does not apply to income obtained from the sale of land which, in connection with this sale, lost its agricultural character,
29) income obtained from the sale of real estate for purposes justifying its expropriation and from the sale of real estate in connection with the exercise by the buyer of the right of pre-emption, in accordance with the provisions on real estate management; this does not apply to cases where the owner of the real estate referred to in the first sentence acquired its ownership within 2 years before the sale of the real estate for a fee at least 50% lower than the real estate sale price in connection with the exercise of the pre-emptive right,
30) revenues obtained from the sale of the right of perpetual usufruct and real estate acquired pursuant to the provisions on real estate management in exchange for property left abroad,
32b) revenues from the exchange of things or rights, if under one contract does not exceed the amount of PLN 2,280,
50) income received in connection with the return of shares or contributions to the cooperative or contributions to the partnership, up to the amount of the shares or contributions to the cooperative or contributions to the partnership,
50a) the value of the property received in connection with the liquidation of a legal person in part constituting the cost of acquiring or subscribing to shares (stocks) or contributions to the cooperative,
51) revenues received from the reimbursement of payments previously made, in accordance with separate regulations, to a company having legal personality - up to the amount of the payments made,
58) payouts:
a) transfer of funds accumulated under the employee pension scheme to another employee pension scheme or to an individual retirement account within the meaning of the provisions on individual retirement accounts,

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b) funds accumulated in the employee pension scheme made for the benefit of the participant or persons entitled to these funds after the death of the participant,
c) funds accumulated in a group form of life insurance related to an investment fund or in another form of group accumulation of funds for retirement purposes for employees - to an occupational pension scheme, in accordance with the provisions on occupational pension programs;
58A) income from savings on an individual retirement account, within the meaning of the provisions on individual retirement accounts, obtained in connection with:
a) the saving and payment of funds by the saver,
b) payment of funds made to persons entitled to these funds after the death of the saver,
c) transfer payment
- except that the exemption does not apply in the case when the saver has accumulated savings on more than one individual retirement account, unless these regulations provide for such a possibility,
59) payments of funds from an open pension fund to the former spouse of a member of this fund, transferred to the account of that spouse in the open pension fund,
61) amounts of canceled student loans or student loans granted on the basis of the provisions on student loans and credits,
105) income obtained from the sale of shares (shares) received by inheritance or donation - in part corresponding to the amount of inheritance and donation tax paid,
109) the nominal value of shares (shares) in a company with legal personality or contributions to a cooperative - covered in exchange for a non-cash contribution in the form of an enterprise or its organized part,
119) interest on securities issued by the State Treasury and bonds issued by local government units, in part corresponding to the amount of interest paid on the acquisition of these securities from the issuer,
130) interest or discount on bonds issued by the Treasury and offered on foreign markets and income from the disposal of these bonds for consideration obtained by natural persons referred to in article 1. 3 sec. 2a.

Income related to business activities

Certain income related to the conducted business activity is also free from income tax, e.g .:

3b) other damages or redress received on the basis of the judgment or the court settlement up to the amount specified in the judgment or the settlement, with the exception of damages or redress:
a) received in connection with the conducted business activity,
36) income from running schools within the meaning of the provisions on the education system, in part expended for the purposes of the school in the tax year or in the year thereafter, and in accordance with paragraph 7, expenditure for the purposes of the school, incurred in connection with the conduct of a private school within the meaning of the provisions on the education system, if not included in the cost of obtaining revenue, it is considered expenditure on:
a) purchase of tangible teaching aids and other equipment necessary to run the school,
b) expenses related to the organization of holiday rest for students, in part constituting the remuneration of the educational and service staff, if not covered by parents' contributions,
37) income from organizing raffle lotteries and raffle bingo by an authorized entity established in the territory of the Republic of Poland on the basis of a permit issued under separate regulations, provided that they were allocated to the implementation of socially useful purposes specified in the permit and regulations of the game,
46) income received by the taxpayer, if:
a) they come from governments of foreign countries, international organizations or international financial institutions from non-repayable aid funds, including from the research, technological development and presentation framework programs of the European Union and from NATO programs granted on the basis of a unilateral declaration or agreements concluded with these countries, organizations or institutions by the Council of Ministers, the competent minister, government agencies or executive agencies, also in cases where the transfer of these funds is made through an entity authorized to distribute non-returnable aid funds, and

(b) the taxpayer is directly pursuing the objective of the scheme financed by the non-repayable aid; the exemption does not apply to the income of natural persons who are commissioned by the taxpayer directly implementing the program objective - regardless of the type of contract - to perform specific activities in connection with the program implemented by him,
47 c) amounts received from government agencies or executive agencies, if these agencies have received funds for this purpose from the state budget,
63A) taxpayers' income, subject to paragraph 2. 5a-5c, obtained from economic activity carried out in a special economic zone on the basis of a permit to conduct business in a given zone, entitling to use public aid, the amount of public aid granted in the form of this exemption may not exceed the amount of public aid for entrepreneurs, allowed for the areas eligible for aid in the highest amount, in accordance with separate regulations,
122) own contribution of the public entity referred to in art. 2 point 5 of the Act on public-private partnership, received by the private partner and intended for the purposes specified in the contract on public-private partnership, subject to para. 19,
129) subsidies, within the meaning of the provisions on public finances, received from the state budget or the budgets of local government units,
136) payments for the implementation of projects under programs financed with European funds, received from Bank Gospodarstwa Krajowego, with the exception of payments received by contractors,
137) funds received by a project participant as aid granted under a program financed with the participation of European funds, referred to in the Act of 2009 on public finances.

Scholarships and other student and student income

The scholarships and other income of pupils and students are also tax-free, i.e .:

23a) part of the income of the persons referred to in art. 3 sec. 1, temporarily staying abroad and receiving income on account of:
a) scholarships - in the amount equal to the allowance for business trips outside the country, specified in the provisions on the amount and conditions for determining the amounts due to an employee employed in a state or local government budgetary unit for a business trip outside the country, for each day in who received the scholarship,
39) scholarships received on the basis of the provisions on academic degrees and academic title as well as on degrees and title in the field of arts, doctoral scholarships received on the basis of the provisions of the Law on Higher Education and other scholarships and scholarships for results in science, the rules of which have been approved by the minister competent for higher education after consulting the Central Council of Higher Education or by the minister competent for education and upbringing,

40) providing material assistance for pupils, students, participants of doctoral studies and people participating in other forms of education, from the state budget, budgets of local government units and from the own funds of schools and universities - granted on the basis of the provisions on the education system, the Law on Higher Education , as well as regulations on academic degrees and academic titles as well as degrees and titles in the field of art,

40B) scholarships for pupils and students, the amount and rules of which have been specified in the resolution of the authority which is the local government unit, and scholarships for pupils and students awarded by the organizations referred to in article 1. 3 sec. 2 and 3 of the Act on Public Benefit and Volunteer Work, on the basis of regulations approved by statutory bodies made available to the public via the Internet, mass media or displayed (displayed) for those interested in publicly accessible premises - up to the amount not exceeding PLN 380 per month, subject to paragraph 10,
89) the value of benefits received by students from the university, on the basis of separate regulations, in connection with the transfer by the university for student apprenticeships - up to the amount not exceeding PLN 2,280 in a tax year,
115) prizes and awards received by students for participation in competitions, tournaments and olympics organized on the basis of the provisions on the education system.

Wins and prizes

Certain prizes and prizes are also exempt from personal income tax, e.g .:

6) winnings in casinos, video lotteries, slot machine games, slot machine games with low prizes and cash and raffle bingo games arranged and run by an authorized entity on the basis of the provisions on games and mutual wagering in force in a Member State of the European Union or in another country belonging to the European Economic Area,
6a) winnings in number games, cash lotteries, telebingo game, mutual wagering, promotional lotteries, audiotele lotteries and raffle lotteries, if the one-off value of these winnings does not exceed PLN 2,280, arranged and operated by an authorized entity on the basis of the provisions on gambling in force in a Member State of the European Union or in another country belonging to the European Economic Area; in accordance with paragraph 23, exemptions from points 6 and 6a, with regard to winnings obtained in a Member State of the European Union other than the Republic of Poland or in another country belonging to the European Economic Area, shall apply provided that there is a legal basis resulting from the agreement on avoidance of double taxation or other ratified international agreements to which the Republic of Poland is a party, until the tax authority obtains tax information from the tax authority of the state on whose territory lotteries, games or mutual wagering are organized and conducted.
68) the value of winnings in competitions and games organized and broadcast (announced) by the mass media (press, radio and television) and competitions in the field of science, culture, art, journalism and sports, as well as prizes related to bonus sales - if one-time value these wins or prizes do not exceed the amount of PLN 760; the tax exemption of awards related to bonus sales does not apply to awards received by the taxpayer in connection with his non-agricultural business activity, constituting income from this activity,
115) prizes and awards received by students for participating in competitions, tournaments and olympiads organized on the basis of the provisions on the education system,
132) granted by domestic and foreign authorities and their offices, including organizational units subordinate to or supervised by them, as well as domestic, foreign and international organizations (institutions) and their bodies, awards:
a) for outstanding achievements in the field of science, culture and art,
b) for human rights activities
in the part transferred as a donation by the taxpayers who received these awards, to the institution implementing the objectives specified in art. 4 of the Act on Public Benefit Activity; in accordance with paragraph 31, this exemption shall apply if:
a) the amount of the award transferred to the institution implementing the objectives referred to in art. 4 of the Act on Public Benefit Activity, is documented with a proof of payment to the bank account of the recipient institution, and in the case of a non-cash award - a document which shows the value of the award and a declaration of the recipient institution about its acceptance,
b) the award referred to in point 1 was transferred at the latest by the expiry of the deadline for submitting the tax return referred to in Art. 45 sec. 1, for the tax year in which the award was received.

The remaining income exempt from personal income tax is listed in detail in Art. 21 sec. 1 of the PIT Act.