In connection with the changes concerning settlement of tax advances for personal income tax (provided for in the Act of 24th February, 2022 amending the Act on Personal Income Tax, the Act on Vocational and Social Rehabilitation and Employment of Persons with Disabilities and the Act on Tax on Extraction of Certain Minerals, which was published in the Journal of Laws of 9th March, 2022, No. 558), please find below information on the current legal status and recommendations for further proceedings.
- Legal status
- Tax payers’ obligations
- Resignation of the employee
- Tax remitter’s action if the employee will not submit statement of resignation
- Other changes
- Legal status
- On 8th January, 2022, the Regulation of the Minister of Finance of 7th January, 2022 on extending the deadlines for certain tax remitters to collect and remit advance payments of personal income tax (Regulation) entered into force.
- The Regulation changed the rules for the settlement of advance payments for income tax collected by tax remitters in January 2022. Doubts have arisen as to the validity of the Regulation on the grounds that it exceeds the limits of the statutory authorisation set out in Article 50 of the Tax Ordinance Act – as a result, the Ministry of Finance has published its position on the extension of the deadlines for certain tax remitters to collect and remit advance payments for personal income tax in 2022. It stated, i.a. that compliance with the Regulation does not expose the tax remitters to any negative penal fiscal liability. At the same time, it does not follow from the Position that a tax remitter who does not comply with the Regulation would be exposed to such criminal or penal fiscal liability.
- Due to doubts concerning regulation of the subject matter by the Regulation – it was decided to transfer these regulations to the Personal Income Tax Act (PIT Act). The relevant Act of 24th February, 2022 amending the Act on Personal Income Tax, the Act on Vocational and Social Rehabilitation and Employment of Persons with Disabilities and the Act on Tax on Mining of Certain Minerals (Act) was signed by the President on 8th March 2022 and published in the Journal of Laws on 9th March, 2022. Thus, it entered into force on 10th March 2022. The Act fully transfers the matter contained in the Regulation to the PIT Act. In view of this, there is no longer any doubt as to compliance with the principles set forth in the Regulation – the same provisions have been included in the PIT Act, therefore tax remitters are obliged to apply the regulations in question when calculating advance payments for PIT.
Therefore, below we present the most important issues – tax remitter’s obligations under the new regulations and recommendations for further action.
2. Tax payers’ obligations
- Until the end of 2022, tax remitters are obliged to compare advance payments collected, i.a. from the salaries of employees and contractors, calculated according to the rules in force until the end of 2021, with advance payments calculated after the changes introduced under the Polish Order.
- As a rule, the taxpayer may have the lower advance PIT payment collected by the tax remitter. The difference in the advance payments is statutorily deferred to be collected in the period when the advance payment calculated for the employee according to the rules applicable in 2021 would be higher than the one calculated currently. If this situation does not occur, the employee will be obliged to make a corresponding PIT surcharge in his annual tax return. In other words, this will result in a possible underpayment of tax in the employee’s annual PIT return.
- If the tax remitter fails to comply with these regulations under the amended PIT Act, it faces penal and fiscal liability.
3. Resignation of the employee
- Provisions deferring the collection of the difference in advance payments apply i.a. to employees and contractors, whose monthly income does not exceed PLN 12 800 gross – for these taxpayers there is a possibility (which we recommend) to submit a statement on not extending the deadline for collecting the difference in advance payments. The statement about resignation from PIT deferral, and hence an application to calculate and collect advance payments only according to the Polish Order, will be submitted by each employee, regardless of whether he or she has, or not filed a PIT-2 form. A model application can be downloaded here: 2022 OŚWIADCZENIA PRACOWNICY.
- Moreover, the submission of such an application by the employee will undoubtedly avoid a possible PIT surcharge at the end of the year.
4. Tax remitter’s action if the employee will not submit statement of resignation
- If the employees fail to submit the statement, the tax remitter will be obliged to apply the provisions of the amended PIT Act, which prescribe the application of new rules for the settlement of PIT advance payments collected as of February 2022 (i.e. on employees’ income paid in February 2022 and following months). This may result in an obligation to adjust the payroll calculation concerning payments made in February 2022. This will entail additional work for employers, i.e. an additional cost of payroll settlement, as well as the obligation to “immediately” reimburse the employee for the resulting difference (in the case that it is not transferred to the account of the tax authority).
- If the employee’s statement is not submitted, the tax remitter will be obliged to collect and pay the previously uncollected surplus of the advance calculated in accordance with the Polish Order over the advance calculated in accordance with the previous principles in the month in which the difference calculated in this manner would be negative (i.e. the advance calculated in accordance with the principles in force until the end of 2021 would be greater than the advance calculated in accordance with the Polish Order).
5. Other changes
- The tax remitter will apply a reduction of the advance payment by 1/12 of the amount reducing the tax (i.e. by PLN 425) also when the PIT-2 statement is submitted during the tax year, and not only before the first payment of remuneration in a given tax year.
- In addition, in the amended PIT Act that the previously submitted “PIT-2” statements remain in force (the taxpayer does not have to submit the “PIT-2” again to the same employer).
If you have any questions or doubts – we remain at your disposal: email@example.com or +48 22 378 17 10