The National Plan for Reconstruction and Increasing Resilience (hereinafter also referred to as “NIP”) is established on the basis of Regulation (EU) No. 2021/241 of the European Parliament and of the Council of February 12, 2021 establishing the Instrument for Reconstruction and Increasing Resilience and the European Commission’s guidelines.

Under the NIP, Poland can use up to €35.97 billion.

Energy transformation

With the introduction of the NIP, the creators point out the need to replace primary energy sources (coal) with renewable sources. Accordingly, a gradual energy transition is planned – to reduce greenhouse gas emissions by 30% by 2030 (compared to 1990). By 2049, there will be a gradual phasing out of coal mines, particularly in the Silesian, Malopolska, Lower Silesian, Lublin, Greater Poland and Łódź provinces. A social contract is currently being prepared for the transformation of the coal mining sector in the Silesian province.

Coal will be replaced by other energy sources – in particular, nuclear power and renewable energy sources, and periodically by natural gas.

Wind turbine windmills closer to residential buildings

It is planned to amend the regulations to allow wind turbines to be located at distances shorter from buildings than under the current “Rule 10H.” The 10H rule means that a wind turbine cannot be built within a distance of less than 10 times the height of the turbine including blades from buildings with residential functions, forms of nature conservation and forest complexes.

The exact location is to be decided by the municipalities where the investment is planned.

Mandatory installation of meters with remote reading of energy consumption

An amendment to the Energy Law requires 80% of end users to install meters with remote reading of electricity consumption by the end of 2028.

No more burning coal in household stove

By 2030, no household coal burning will be allowed in cities, while by 2040 the ban will extend to rural areas.

Green Urban Transformation Fund

The Green Urban Transformation Fund, co-managed by local governments, will finance, among other things, investments for. improving air quality, green infrastructure, nature investments, developing zero-emission transportation or improving the energy efficiency of buildings.

Only electric and hydrogen public transport buses

Cities with a population of more than 100,000 will be able to procure only electric and hydrogen buses for public transportation purposes starting in 2025.

Charging stations in residential buildings

The National Recovery Plan provides for an amendment to the Law on Electromobility and Alternative Fuels. The building manager will not be able to refuse to install a charging point in a multifamily building if it is technically possible.

Competition for projects to improve energy efficiency

The National Reconstruction Plan provides for a competition to select beneficiaries to support projects that improve energy efficiency and reduce energy intensity.

The investment will support projects:

consisting of, among other things. on the construction, expansion or modernization of existing industrial and production facilities, industrial equipment, electric power installations, leading to the reduction and rationalization of energy consumption and increasing the efficiency of the production process;
to improve energy efficiency in the modernization and improvement of industrial and energy processes, including the replacement of equipment and installations used in industrial processes or energy processes;
Construction and installation of enterprises’ own renewable energy sources, including wind turbines, solar panels, photovoltaic panels, small hydropower plants, geothermal systems, heat pumps, etc;
Construction of energy storage facilities at enterprises in conjunction with renewable energy generation;
Construction or modernization of own (internal) low-carbon energy sources, including cogeneration;
Increasing the share of use of low- or zero-carbon fuels in generation processes, with the highest emission standards;
involving the replacement of low-energy-efficient heat sources using fuels (solid, liquid, gas) or electricity with sources with higher energy efficiency;
Thermal modernization of buildings and facilities used in industrial processes;
involving the transformation of energy-intensive sectors enabling alignment with EU climate goals by reducing direct and indirect greenhouse gas emissions and improving energy efficiency through, among other things. Replacement of installations, process lines, activities in the area of reducing process emissions.

Energy storage from renewable energy sources

The National Reconstruction Plan provides for regulating the storage of electricity from renewable energy sources. The proposed solutions exempt electricity storage from the tariff. In addition, double charging of network fees is to be abolished.

Subsidies are also provided for the purchase and installation of home electricity storage for prosumers.

Productivity Strategy 2030

The Productivity Strategy 2030 will identify seven areas of intervention in which it will be possible to support productivity growth in the Polish economy. The project is after public consultation.

Income tax relief for business angels

The Productivity Strategy 2030 envisages the introduction of income tax deductibility for part or all of the profit earned by an equity investor from holding shares in a newly established company engaged in the implementation of new technologies.

Relief for robotization

The Productivity Strategy 2030 provides relief for companies investing in machines that automate work. The costs of such investments will be accounted for during the year under the current rules, and in addition, the taxpayer, when filing his CIT return, will attach an appendix CIT-ROBOT indicating these expenses. A certain percentage of the total investment expenses will once again be deducted from the tax base.

The realization of the Strategy in this regard is a draft amendment to the PIT and CIT laws, which will allow a taxpayer engaged in non-agricultural business activity to deduct 50% of the tax-deductible expenses incurred for robotization from the tax base in 2022-2026.

Deductible costs incurred for robotization will be considered:

The cost of acquiring brand new industrial robots, machinery and equipment functionally related to robots;
The cost of acquiring intangible assets necessary for the proper commissioning and acceptance of industrial robots;
The cost of acquiring training services for industrial robots or the above. intangible assets;
Fees from the lease agreement, relating to industrial robots and others mentioned above. fixed assets, if the lessor transfers ownership of these fixed assets to the lessee at the end of the basic lease term.

Legal Shield

The Legal Shield is a planned package of laws aimed at speeding up administrative decisions through a series of solutions, making it easier to deal with official matters. Currently, projects are in the pipeline.

Actions to expand the activities of those affected by the pandemic

The National Reconstruction Plan envisages providing support to those most severely affected by the pandemic (hotel, catering, tourism, cultural sectors). The support will be aimed at changing or expanding the business profile of these entities.

Activities in the agricultural and food sector

In order to increase the resilience of agricultural and food supply chain actors to crises, the NIP provides for a number of investments.

Local storage and distribution centers and direct sales areas for local products, such as MOPs or vegetable gardens, will be created.

It is envisaged to support agri-food processing SMEs in the purchase of machinery for processing and storing products.

The maximum subsidy per entrepreneur will be 10 million zlotys, and per farmer – 500 thousand zlotys. PLN.

Funding for recyclable materials market technology

The government plans to hold a competition for investment projects of technologies that contribute to the creation of a market for recyclable materials. The competition can be won by 5 entities, with a funding value of about 70.1 million zlotys for each.

Funding for environmentally friendly technologies

A competition for investment projects of environmentally friendly technologies is planned. The number of enterprises that can receive funding was estimated at about 100 entities. The minimum subsidy can be 200 thousand. Euro, and the maximum – 1 million euros.

Activities related to the labor market

The National Reconstruction Plan provides for a series of measures to reduce unemployment.

Employers’ responsibilities

Public and private sector employers (entrepreneurs who benefit from public funds by, among other things, participating in tenders) will be obliged to report job offers to the Central Labor Offer Database.

Voucher for undertaking continuing education

Adult jobseekers will be eligible for a voucher to undertake continuing education up to the average wage. The voucher will be able to be used for development services from the offerings in the Development Services Database (including university services).

National Training Fund

Currently, companies that employ a minimum of one person on an employment contract can benefit from funding under the National Training Fund. The subsidy is:

for microenterprises – 100% of the cost of training, but no more than 300% of the average salary in a given year per participant
For other companies – 80% of the cost of training, but no more than 300% of the average salary in a given year per participant.

The National Reconstruction Plan plans to increase the budget of the National Training Fund and expand the group of beneficiaries.

Electronic employment contracts

Some employers will be given the option of concluding and settling employment contracts electronically through the teleinformatics system praca.gov.pl. The system will automatically perform all HR activities related to the employment of an employee, including reporting to Social Security and the National Tax Administration, calculating and paying contributions and tax advances, as well as the amount of salary, paid to the employee’s account.

Social enterprises

The National Reconstruction Plan provides for the creation of a so-called “National Reconstruction Plan. social enterprises, i.e. entities employing people at risk of social exclusion (e.g. the elderly, the sick, people leaving prisons). Social enterprises are to provide services to the local community.

Remote working a standard

The KPO provides for an amendment to the Labor Code, according to which remote work is to be performed not only on an extraordinary basis, but also under typical conditions, based on an agreement between the employee and the employer.

Employers will be able to participate in a support program that includes subsidies for digitization consulting for companies, training for employees and managers in remote tasks, and the purchase of licenses and software for remote work.

The average amount of funding will be 15 thousand. Euros per company and will include:

consulting – up to 20% of the support value
training – min. 30% of the support value
software and licenses – min. 50% of the value of the support.

Employment of people of retirement age

In view of Poland’s noticeable demographic trends, the National Reconstruction Plan provides for measures to encourage older people to remain in employment despite reaching retirement age.

One such solution is an automatic reduction in the amount of income tax on wages for those who have reached the right to retire and yet continue employment. The amount of the reduction will be transferred to the employee’s individual retirement account. The relief would be available only up to the first tax threshold. The change is scheduled for the first quarter of 2025.

Polish governance – tax laws

A draft amendment to the tax laws for the implementation of the “Polish Order” plan has appeared on the website of the Government Legislation Center. We will briefly describe the most important changes that the program implies.

Taxation of the value of illegal labor

In order to tighten the tax system, a new revenue category will be introduced – the value of the work of an illegally employed person. Illegal employment within the meaning of this regulation occurs when an employer hires an employee without confirming in writing within the required time (i.e., before the employee is allowed to work) the type of contract concluded and its terms.

Taxation will therefore be levied on the value of the work of the illegally employed person determined for each month in which the illegal employment was found, in the amount equivalent to the minimum wage.

At the same time, the employee’s income from illegal employment will be exempt from income tax (payable by the employee), and the burden of bearing the tax on this account will be shifted to the employer. It can be assumed that an employer who employs illegal workers will be charged double taxation – the value of the illegal worker’s labor and the value of the illegal worker’s income. Income will also be determined if the salary is actually paid to the employee.

The consequence of the above regulations is that payments and benefits from illegal employment are excluded from being deductible.

The amendment also provides for a change in the payment of social security (pension, disability and sickness) contributions. In the event that illegal employment is found or the basis of assessment is underestimated, contributions on wages from illegal employment and on the portion of undisclosed wages shall be financed entirely from the contributors’ own funds, including the portion that would normally be payable by the insured.

Paid to the Social Insurance Institution the aforementioned. Social security contributions will not be considered deductible.

Income from receipt of assets after liquidation of the company

Income from cash capitals will include income from the receipt of assets in connection with the liquidation of a non-corporate company, the withdrawal of a shareholder from such a company or the reduction of a capital share in such a company, as a result of the receipt of which Poland loses the right to tax income from the disposal of such assets.

Such income will be taxed at a flat rate of 19%.

Tax-free interest

Interest on late payment of receivables not subject to income tax, free of income tax or on which tax collection has been waived under the provisions of the Tax Ordinance will be subject to statutory tax exemption.

Tax exemption for income from the sale of shares

Income derived from the paid disposal of shares subscribed for or acquired by the taxpayer or the taxpayer’s heir as a result of an initial public offering will be exempt from tax, if the disposal took place after three years from the date the shares were admitted to trading on a regulated market or introduced into an alternative trading system. An additional condition for the exemption is that the taxpayer and the testator have not been related to the company in the two years prior to the acquisition (purchase) of shares.

Exclusion of certain properties from depreciation

Currently, depreciation, i.e. the ability to include the cost of gradual wear and tear of fixed assets in tax costs, is subject to, among other things, cooperative ownership of residential units and the right to a single-family house from a housing cooperative, if they were acquired from another entity and are suitable for economic use on the date of acceptance for use. After the amendment of the tax law, the above rights will no longer be subject to depreciation.

Extension of the deadline for preparing transfer pricing documentation

Currently, taxpayers are required to submit transfer pricing information and a statement on the preparation of local transfer pricing documentation by the end of the ninth month after the end of the fiscal year (in practice, mostly by the end of September). The amendment calls for extending this deadline to the end of the eleventh month after the end of the fiscal year. The authority authorized to obtain information will no longer be the Head of the National Tax Administration, but the head of the relevant tax office.

The amendment calls for extending the deadlines for documentation to the end of the tenth month after the end of the fiscal year.

Exemptions from the obligation to prepare local transfer pricing documentation

The law provides for a number of situations that, despite meeting the prerequisites for the obligation to prepare local transfer pricing documentation, exclude from such obligation.

The amendment provides for further exemptions.

Transactions concluded exclusively between related parties’ establishments located in Poland and having their registered office in a European Union or European Economic Area country other than Poland will not be subject to mandatory transfer pricing.

This obligation will also be abolished in the case of a transaction concluded by a foreign permanent establishment, located in Poland, of an entity with headquarters in a European Union country or the European Economic Area other than Poland, with an affiliated entity with headquarters in Poland.

The above exclusions apply in the tax year in which the revenues or expenses of such transactions are attributed to the foreign permanent establishment. The condition for taking advantage of the exemption is that none of the related parties have benefited from tax exemptions and there is no tax loss in respect of the aforementioned. revenues or costs.

Transfer documentation will also not need to be prepared for transactions involving the settlement of expenses by related parties to an unrelated party if:

no added value is created and settlement is made without taking into account the margin or profit mark-up,
Settlement is made without the use of an allocation key,
settlement is not related to another controlled transaction,
settlement occurred immediately after payment to an unrelated party,
the related party is not an entity domiciled, established or managed in a territory or country practicing harmful tax competition,

– whereby the above conditions must be met together.

Employee relief

The bill calls for the introduction of a so-called relief for employees, i.e. the ability to deduct from income an amount that depends on the level of annual income, taxed using the tax scale.

The relief will be applied if the taxpayer’s annual income from a business relationship, employment relationship, contract work and cooperative employment relationship amounts to at least PLN 68,412 and does not exceed the amount of PLN 133,692 (monthly from PLN 5,701 to PLN 11,141, respectively).

Let’s try to calculate how much the potential deduction will be for the lowest and highest amount eligible for the deduction.

For incomes between PLN 68,412 and PLN 102,588, the amount of the adjustment reduction is [(labor income x 0.06684549) – PLN 4,572] : 0.17. That is, roughly speaking, for the lowest indicated amount the reduction per year will be about PLN 6, and for the highest – about PLN 13,444.

For income higher than PLN 102,588 and lower than PLN 133,692, the amount of relief will be calculated according to the formula [-(income from work x 0.07346090) + PLN 9821.75] : 0.17. In view of this, approximately for the lowest amount indicated, the reduction per year will be about PLN 13,444, and for the highest – about PLN 4.

Tax deduction for trial production costs of a new product

A non-agricultural taxpayer will be allowed to deduct from his tax base an amount equal to 30% of the sum of the costs of trial production of a new product and its introduction to the market. The amount of the deduction cannot exceed 10% of the income earned by the taxpayer from business activities.

Tax deduction for costs incurred to increase revenue from product sales

A taxpayer earning income from non-agricultural business activities will deduct from the tax base deductible expenses incurred to increase income from the sale of products, up to the amount of income earned in the tax year, not to exceed PLN 1,000,000.

The condition for taking the deduction is that the taxpayer increases its revenue from the sale of products within 2 years after the year in which the expenses were incurred.

Tax deduction of expenses for the acquisition of shares in an alternative investment company

The amended law provides for the possibility of deducting from the tax base 50% of the expenses incurred for the acquisition or subscription of shares (stocks) in an alternative investment company (ASI) or a capital company in which the ASI holds at least 5% of the shares or will hold at least 5% of the shares within the next 90 days, up to an amount not exceeding PLN 250,000.

For the above deduction to apply, the following conditions must be met together:

a shareholder (stockholder) of an alternative investment company is an entity that has acquired or taken up shares (stock) in an alternative investment company financed in whole or in part with non-refundable European funds for venture capital investment in Poland,
the taxpayer has entered into an investment agreement with the ASI regulating the rights and obligations of the ASI and the taxpayer arising from the taxpayer’s acquisition of shares in the ASI or the joint investment of the alternative investment company and the taxpayer in a capital company in which the ASI will acquire or take up at least 5% of the shares,
during the 2 years preceding the date of the first acquisition or purchase of shares (stocks) in ASI or in a capital company, these companies were not related to the taxpayer,
the taxpayer will hold the shares (stocks) for a continuous period of at least 24 months.

Tax deduction for payment terminal expenses

The draft provides for the introduction of the possibility of deducting from the tax base the expenses for the acquisition and operation of a payment terminal that allows accepting card payments. The deduction can be made in the year of first accepting card payments and in the following year.

Expenses related to the purchase and operation of the terminal will be taken into account up to the amount of PLN 2,500 (for taxpayers exempt from the obligation to keep records of sales to consumers) and PLN 1,000 (for other taxpayers) per year.

PIT tariff change

Currently, PIT is calculated according to the following scale:

Tax assessment basis in PLN		The tax is
over	to	The tax is
	85 528	17%	minus the tax reduction amount
85 528		14,539 zloty 76 gr +32% of the surplus over 85,528 zloty	minus the tax reduction amount

The bill proposes to introduce the following scale:

Tax assessment basis in PLN		The tax is
over	to	The tax is
	120 000	17% minus the tax-reducing amount of PLN 5,100
120 000		PLN 15,300 + 32% of the excess over PLN 120,000

End of tax card taxation

With the introduction of new tax laws, the possibility of taxation by tax card is to disappear. The use of the tax card will only be allowed for entities that used it as of December 31, 2021. From January 1, 2022, no new entities will be able to apply for such taxation.

Taxpayers who abandon the use of tax card taxation will no longer be able to return to this form of accounting.

Lump sum on income of foreign persons transferring their residence to Poland

The amendment provides for the operation of a new model of tax settlement for persons transferring their place of residence (tax residence) to Poland. A taxpayer who meets all of the following conditions may be subject to taxation under these rules:

by the end of January of the year following the tax year in which he moved his place of residence to Poland and was subject to unlimited tax liability, will submit to the tax office a statement on the choice of lump-sum taxation, and
did not have a residence in Poland for at least five of the six tax years immediately preceding the tax year in which he transferred his residence.

Income earned outside the territory of Poland is subject to lump-sum taxation. The lump sum is PLN 200,000 for the tax year regardless of the amount of income and is payable by June 30 of the following year. Lump sum taxation applies for 10 years.

In order to benefit from lump sum taxation, a taxpayer must incur expenditures for economic growth, scientific and educational development, cultural heritage preservation or physical culture of at least PLN 100,000 in a tax year. If this condition is not met, the taxpayer loses eligibility for this taxation model.

The above rules also apply to a member of the taxpayer’s family (spouse or child), with a lump sum of PLN 100,000 for each tax year on the income earned by the taxpayer, and the taxpayer does not have to incur growth expenses.

Extension of the definition of possession of management in the territory of Poland

As a rule, if a taxpayer has a registered office or management in Poland, he is subject to tax on all his income, regardless of where it is earned. The amendment to the CIT Law provides for the introduction of a legal presumption that if a taxpayer does not have a registered office in Poland, but persons or entities sitting on the controlling, constituting or managing bodies have a residence, registered office or management in Poland, the taxpayer is deemed to have a management in Poland. In view of this, Polish tax residents will be companies registered outside Poland and operating outside Poland, as long as the board members of these companies reside in Poland.

Obligation to keep electronic tax records – the hidden entrepreneur test returns?

The draft provides for the introduction of an obligation for CIT and PIT taxpayers to keep accounting books and records using computer programs and to send them electronically to the tax office.

Transmission of electronic books and records will take place not only after the end of the tax year, but also during the year – for example, monthly, if income on which monthly advances are paid is determined based on these documents.

The obligation to implement electronic systems will take effect on January 1, 2023.

There have been claims that the above solution may constitute the introduction of the so-called “back door”. Entrepreneur test, i.e., verifying whether self-employed persons are actually engaged in business or whether they are hiding an actual employment relationship in this way. It’s not hard to imagine that sending settlements electronically – in addition to easing paperwork for entrepreneurs – will also make it easier for tax offices and the Social Security Administration to conduct inspections.

Tax deduction of expenses for acquisition of shares in a company

After the amendment to the CIT Law comes into force, a taxpayer (entrepreneur) who earns income other than from capital gains will be able to deduct from the tax base expenses for the acquisition of shares (stocks) in an incorporated company. The deduction will be allowed up to the amount of income earned in the tax year by the taxpayer (from income other than capital gains) – but not more than PLN 250,000 in a tax year.

To qualify for the deduction, the following conditions must be met together:

the company whose shares (stocks) are acquired has a legal personality and has its registered office or management in Poland or in another country with which Poland has concluded a double taxation avoidance treaty containing a legal basis for the tax authority to obtain tax information from the tax authority of that other country;
the main object of the company is the same as that of the taxpayer, or the activities of such a company can reasonably be considered to be support activities of the taxpayer, while the activities of such a company are not financial activities;
the activity was carried out by the company and by the taxpayer before the date the taxpayer acquired shares in it for a period of not less than 24 months;
during the two years prior to the date of acquisition of shares (stocks), the company and the taxpayer were not related parties;
The taxpayer, in a single transaction, acquires shares (stocks) of the company in an amount representing an absolute majority of voting rights.

Expenses for the acquisition of shares are considered to be expenses directly related to the transaction, including legal services for the acquisition of shares and their valuation, notary, court and stamp fees, taxes and other public charges. Expenses do not include the price paid for shares and the cost of debt financing.

If the shares are disposed of or redeemed before the expiration of 36 months from the date of acquisition, the taxpayer will increase the tax base by the amount of the deduction made in the return for the current tax year. Similarly, if the taxpayer goes into liquidation or is declared bankrupt or ceases operations for any other reason before 36 months have passed.

Tax on flipped income

The project calls for the introduction of a so-called “tax on flipped income” of 19%.

Pass-through income is the cost incurred directly or indirectly for the benefit of a related party of the company, representing a receivable of that party, if:

the income tax actually paid by that entity in its country of residence is 25% less than the amount of income tax that would be due in Poland and
costs deductible or tax-deductible or paid by a related party in the form of dividends accounted for at least 50% of the value of the related party’s revenues.

To the aforementioned. costs include:

consulting services, market research, advertising services, management and control, data processing, insurance, guarantees and warranties, and services of a similar nature,
fees and charges for the use or right to use copyrights, licenses, industrial property rights, know-how,
transfer of debtor default risk on loans (other than bank loans), including under liabilities arising from derivative financial instruments and benefits of a similar nature,
Costs of debt financing related to obtaining funds and using these funds, in particular interest, fees, commissions, premiums, the interest portion of the lease installment, penalties and fees for late payment of liabilities, and costs of securing liabilities, including costs of derivative financial instruments,
fees and remuneration for the transfer of functions, assets or risks,

– if the sum of these costs to entities (including unrelated parties) is at least 3% of total deductible expenses.

Taxation of holding companies

The amendment to the CIT Law provides for regulating the taxation of holding companies.

A holding company is either a limited liability company or a joint stock company that jointly meets the following conditions:

owns, continuously for a period of at least 1 year, directly by title, at least 10% of the shares (stocks) in the capital of a subsidiary,
does not form a tax capital group,
does not benefit from tax exemptions dot. income derived from activities specified in the decision on support nor conducted in the special economic zone and exemptions from tax on dividends from the participation in the profits of legal entities,
conducts actual business,
shares (stocks) in this company are not held, directly or indirectly, by a shareholder established in the territory or in the country:
1. conducting harmful tax competition,
2. identified in the EU list of non-cooperative jurisdictions for tax purposes adopted by the Council of the European Union,
3. with which Poland has not ratified an international treaty, in particular a double taxation avoidance treaty, or the European Union has not ratified an international treaty providing a basis for obtaining tax information from the tax authorities of that country.

A subsidiary within the meaning of the aforementioned. rules is a company that meets all of the following conditions:

at least 10% of the shares in the capital of this company are held directly by the holding company under the title of ownership, continuously for at least 1 year,
does not own more than 5% of the shares (stocks) in the capital of another company,
does not hold titles to an investment fund or a mutual investment institution, all rights and obligations in a company that is not a legal entity, and other property rights related to the right to receive a benefit as a founder (founder) or beneficiary of a foundation, trust or other entity or a legal relationship of a fiduciary nature or rights of a similar nature,
does not form a tax capital group,
does not benefit from tax exemptions dot. income generated from activities specified in the decision on support nor conducted in the special economic zone.

The regulation introduces an income tax exemption for dividend income earned by a holding company from a subsidiary in a portion equivalent to 95% of the amount of dividends.

In addition, a tax exemption has been introduced for income from the paid disposal of a subsidiary’s shares to an unrelated party, provided that the holding company submits to the head of the tax office competent for it – 5 days before the date of disposal – a statement of its intention to take advantage of the exemption. This exemption does not apply if at least 50% of the subsidiary’s assets are real estate located in Poland.

Changes to lump sum taxation rules

A taxpayer may apply flat-rate taxation if m. in. its total revenues did not exceed PLN 100,000,000 in the previous year. After the amendment, this condition will be abolished. In addition, the circle of entities that can apply the lump sum will be expanded to include a limited partnership and a limited joint-stock partnership.

Currently, in order for a CIT taxpayer to be eligible for lump-sum taxation, it must incur certain expenditures for investment purposes.

The amendment will abolish this obligation, introducing in its place the possibility of greater expenditures, resulting in preferential taxation.

In terms of the subject of income taxation on income from hidden profits in a lump sum, the following benefits, the beneficiary of which is the shareholder, will be added to the catalog of hidden profits:

surcharges paid in the event of a merger or division of entities;
Interest on the capital share, paid to the shareholder by the company;
Profit earmarked to supplement the capital share of a shareholder of the company;
monetary and non-monetary benefits paid in the event of a reduction in a shareholder’s equity interest in the company.

Income from undisclosed business operations earned during the tax year will be added to the flat tax base.

New lump sum rates on personal income

The new order introduces a 14% tax on revenues from the provision of healthcare services, architectural and engineering services, technical research and analysis, and specialized design.

The 12% tax will cover revenue from the provision of game and software publishing services and hardware consulting.

At the same time, the tax deductibility of the amount of health insurance premiums will be excluded.

VAT group taxation

An amendment to the VAT law introduces the concept of a “VAT group,” that is, a group of financially, economically and organizationally related entities registered as a taxpayer.

A financial relationship exists if one taxpayer directly owns more than 50% of the share capital of the other group members.

For entities to be economically related, at least one of the following conditions must be met:

the object of the group members’ main activities is of the same nature
Group members’ activities are complementary and interdependent
A group member is engaged in an activity that fully or largely benefits other group members.

An organizational link occurs when taxpayers legally or de facto are under common management or organize their activities in concert.

One entity can only be a member of one VAT group, and a group cannot be a member of another group. The VAT group is permanent, which means that during the existence of the group, it is not possible to expand it with other members or reduce it by any of its members.

The supply of goods and services made by a member of a VAT group to another member of that group will not be subject to VAT.

The agreement on the formation of the group must be in writing.

All supplies of goods and services made by a member of a VAT group to an entity outside the group will be considered to have been made by the group, and conversely, supplies made to a group member by an entity outside the group will be considered to have been made to the VAT group.

During the period that a VAT group holds taxable status, its members are jointly and severally liable for the group’s tax liabilities.

Change in health insurance premium

Entrepreneurs engaged in non-agricultural business activities, taxed according to the tax scale or flat tax, will pay health insurance premiums according to the new rules. For these entities, the annual contribution assessment basis will be business income, determined as the difference between income and deductible expenses, less the amount of contributions to pension, disability, sickness and accident insurance, if not included in deductible expenses. If the contribution base so calculated is less than the number of months of insurance coverage multiplied by the minimum wage, the contribution base will be the product of the months and the minimum wage.

In the case of the use of flat-rate taxation on registered income by individuals engaged in non-agricultural business activities, the basis for the health contribution will be the monthly income from the activity, reduced by the amount of social security contributions (if they have not been included in deductible expenses or deducted from income). The health insurance premium will be 1/3 of the flat rate on income, applied to taxation.

If there is an overpayment of health insurance premiums, which can be spoken of when the sum of the premiums paid for individual months is higher than the annual premium set on an annual basis, the insured can claim a refund of such overpayment.

Table of contents

National Plan for Reconstruction and Resilience Enhancement