- Changes in the rules for determining the basis for health insurance premiums for entrepreneurs
- Possibility to change the form of settlement for entrepreneurs
- New rules on remote working in 2022
- Electronic conclusion of agreements – draft
- Obligation to state reasons for termination of fixed-term contracts
1. Changes in the rules for determining the basis for health insurance premiums for entrepreneurs
Another change in the rules for determining the basis for health insurance premiums has entered into force. The changes apply to persons conducting business activity and are subject to taxation in accordance with general principles (i.e., in accordance with the scale, flat tax or lump-sum tax). The changes were introduced by the Act on amending the Commercial Companies Code and certain other acts (Journal of Laws 2022, item 807). The new regulations on health insurance premiums entered into force on 13 April 2022.
According to the introduced changes, entrepreneurs taxed on general principles
- when determining the amount of revenues from their business activity, do not take into account revenues not subject to income tax, with the exception of:
- revenue earned from business activities conducted in the SEZ on the basis of a permit (Article 21(1)(63a) of the PIT Act),
- income earned from business activity on account of performing a new investment specified in a decision on support (Art. 21 sec. 1 item 63b of the PIT Act)
- income benefiting from an exemption due to the so-called return relief, relief for families 4+, relief for working seniors (art. 21 par. 1 item 152-154 of the PIT Act).
- When determining the amount of income, they take into account special rules of determining income for PIT purposes referred to in Article 24 par. 1-2b of the PIT Act, including the so-called inventory differences. This change will allow entrepreneurs to take account of inventory differences calculated for PIT purposes;
- Keeping a revenue and expense ledger, preparing an inventory during the year for PIT purposes, may take inventory differences into account when calculating monthly health care contributions.
However, the rules according to which the basis for calculating the health contribution is not the same as the basis for calculating PIT (advance tax payment) have not changed. This means that allowances (e.g. R&D allowance) and deductions (e.g. tax loss) are not taken into account when deducting the health contribution.
- when determining the income referred to in Article 81(2) and (2c) of the Act on healthcare services financed from public funds, in the wording in force from 13 April 2022, from income referred to in art. 14 section 2 point 1 of the PIT Act (income from paid disposal of specific assets, e.g. fixed assets), this income, determined taking into account the second sentence of art. 24 section 2 of the PIT Act (specific manner of determining income in the case of paid disposal of assets), is not increased by depreciation write-offs included in tax deductible costs before 1 January 2022. This applies, for example, to fixed assets which the entrepreneur depreciated before 2022 and recognised the depreciation write-offs as tax deductible costs.
- when determining the basis for the assessment of health insurance premiums in 2022, the income referred to in Article 81 par. 2 and par. 2c items 1 and 3 of the Act on health care services financed from public funds, in the wording binding from 13 April 2022, is not increased by the inventory difference if the final inventory is higher than the initial inventory. Consequently, in relation to 2022, the entrepreneur will not increase income for health contribution purposes if the final inventory is higher than the initial inventory (Article 24(2), first sentence, of the PIT Act).
As regards persons taxed with a lump-sum tax on registered incomes, the changes concern not taking into account for the purposes of determining the basis for health insurance contributions the amount of income not subject to income tax, except for income referred to in Article 21 par. 1 items 152-154 of the PIT Act, i.e. income benefiting from an exemption under the so-called return relief, relief for families 4+, relief for working seniors.
It should be pointed out that such frequent changes in the manner of calculating the basis for health insurance premiums additionally complicate settlements, causing further, after the previously introduced changes, doubts among entrepreneurs. Further changes in this respect cannot be ruled out.
2. Possibility to change the form of settlement for entrepreneurs
Polish Order 2, which in its essential part is to enter into force on 1 July 2022, contains further surprises for sole traders. Potentially, these may be beneficial proposals, but the legislator neither facilitates the assessment in this respect (without the help of a specialist), nor even the very process of making a choice.
First of all, the matter concerns the change of the tax rate on the so-called general principles, i.e. according to the tax scale. Unfortunately, only the lowest rate is changed from 17% to 12% with a simultaneous reduction of the free amount from PLN 5100 to PLN 3600. And already here an unjustified differentiation appears: taxpayers accounting for lump-sum tax on registered incomes will be able to opt for taxation according to the scale as early as from 1 July 2022 (i.e., change the rules during the year by submitting a declaration until 22 August 2022), while taxpayers accounting for their income on a flat-rate basis will not be able to do so. These have to wait until the new year to change their taxation rules, which, of course, can be done by those of the flat-rate taxpayers who fail to do so in August this year.
Another difference also relates to another “good change”, which is related to the restoration, in part, of the health contribution. “Lump-sum taxpayers will be able to deduct 50% of health insurance premiums paid in the tax year under the Act of 27 August 2004 on health care services financed from public funds (Journal of Laws of 2021, item 1285, as amended6):
a) on account of non-agricultural activity taxed in the form of a lump sum on registered income,
b) for persons cooperating with a taxpayer taxed as a lump sum on registered incomes
– if they have not been returned to the taxpayer in any form.”
Similarly, entrepreneurs using the tax card will be able to deduct 19% of the health premium paid from the tax card.
Taxpayers settling according to a flat rate will be able to deduct the contribution, but up to the limit of 8700 PLN per year.
And since we are talking about health premiums, it is worth noting that the draft law on the Polish Order 2 does not, unfortunately, abolish the unfavourable rules of calculating health premiums. On the contrary, provisions are introduced to “equalise” the amount of the contribution to the level resulting from its annual calculation, even if the taxpayer does not pay this contribution in the meantime.
3. New rules on remote working in 2022
According to the announcements of the Ministry of Family and Social Policy, the amendment to the Labor Code on remote work could enter into force in the second half of 2022. The new regulations will replace the current provisions on teleworking, which in practice turned out to be inapplicable. The main assumption of the proposed changes is that remote work is to become a permanent solution, and the rules for its performance are to be agreed between the employer and employee. Moreover, the company will be able to unilaterally recommend such a mode of performance of duties only in specific cases.
The proposed regulations assume that the employee will indicate to the employer the place of work, and this place will have to be agreed with the employer. The employer will be obliged to cover the costs of remote work, including providing the employee performing remote work with the necessary materials and work tools, costs related to the installation, service, operation and maintenance of the necessary work tools, electricity costs and the necessary access to telecommunications lines or pay the equivalent for employee for using their own tools. In addition, the employer will also be required to cover the costs of appropriate training in the use of the provided tools and provide the employee with technical assistance.
Beneficial solutions are also to be introduced, including for parents raising children up to 4 years of age, parents caring for a disabled person or pregnant women, according to which the employer will not be able to refuse such employees to work remotely.
These changes will allow to regulate many issues that raise doubts of employers and employees, which have arisen since the implementation of remote work on a large scale in many companies. Among the proposed solutions, many of them will be beneficial for employees.
4 Electronic conclusion of agreements – draft
As we read in the Explanatory Memorandum to the Draft Act on Certain Electronically Concluded Contracts and Amendments to the Act on Social Assistance – List No. UD230, (hereinafter: the Draft): “It is assumed that the introduced (…) ICT system will facilitate, in accordance with the law, the drawing up of employment contracts, commission contracts, activation contracts and harvest assistance contracts. Thanks to this system, in one place it will be possible both to conclude an agreement and to register it in ZUS. The system will automatically generate declarations and information. Through the System it will be possible to sign the above mentioned documents and send them directly from the System”.
The proposed act aims to contribute to a significant reduction of the burden, including, among others, ensuring that contracts are concluded in accordance with the applicable regulations and guaranteeing correct calculation and payment of taxes and insurance premiums. The system is to ensure security for the employer or parents employing nannies, through authorized access to the ZUS ICT system in order to destination of the employee’s or, for example, nanny’s insurance documents. The system will have a number of automated processes for transferring contracts to ZUS and tax offices. It is assumed that the system will provide the employer with such functionalities as calculating the amount of leave to which the employee is entitled and, what is important, will enable archiving of the documentation for years.
The streamlining of the above activities is expected to particularly concern microentrepreneurs, farmers and natural persons who sign employment contracts, mandate contracts or service provision contracts. According to the Project, initially the ICT system is to be voluntary. The condition of implementation of such agreements into the System will be the consent of both parties, as well as entering of all necessary data. According to art. 16 of the Project, the Act will enter into force 30 days after its announcement.
Although the System may potentially have a positive impact on employers due to significant streamlining of the contracting process, it is worth bearing in mind that the ICT system created in this way may be used as a tool to identify any irregularities in employment.
5.Obligation to state reasons for termination of fixed-term contracts
The Council of Ministers on 15 February 2022 approved a draft act amending the Labour Code and certain other acts (list number: UC118). The reason for the amendment of the Labour Code is due to the work on the implementation of two EU directives into the Polish legal system.
As a result of the European Commission’s statement on the different treatment of fixed-term workers compared to permanent workers, the unequal treatment of fixed-term workers with regard to the termination of their employment contracts in relation to permanent workers is unjustified, and therefore it is proposed to introduce changes in the conditions of termination of employment contracts for this group of workers.
The proposed changes concerning the conditions for termination of fixed-term contracts include the introduction of new provisions to the Labour Code regulating:
- obligation to state the reason for termination of a fixed-term employment contract,
- obligation to inform in writing the trade union organisation representing the employee about the termination and the reasons for it
- the possibility to apply for reinstatement in the case where it is found that the termination of an employment contract for a specified period of time is unjustified or violates the provisions on termination of employment contracts and the contract has already been terminated,
The provisions stipulating that an employee is only entitled to compensation if a fixed-term employment contract is terminated in breach of the provisions on termination of such a contract are also to be repealed.
If the proposed changes come into force, the employer will be obliged not only to indicate the reason for termination of the fixed-term employment contract, but also to make it sufficiently concrete and provide it in an understandable way. According to the legislator, these changes will remove inequalities in the Labour Code between fixed-term and permanent employment contracts.