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PIT relief for taxpayers under 26 years of age

2019-07-29

On 1 August 2019, new regulations will come into force concerning the taxation of the income earned by young employees and contractors. According to the amended PIT Act, the relief will apply to those under 26 years of age.

The age criterion is one of the basic conditions of eligibility for the relief. It is worth noting that the regulations only apply to those deriving their income from public-service relationship, employment, home-based work, co-operative employment and contract of mandate, regardless of the number of contracts concluded. As a result, those working under contracts to perform a specific task or self-employed will not be eligible for the so-called ‘zero PIT’.  

The relief will cover the revenue earned by a taxpayer of up to PLN 85,528 in a year. This amount coincides with the first threshold of the taxation scale. Any excess over the threshold will be taxed at the 32 % rate applicable to the second threshold of the taxation scale.

Until 31 July 2019, the current regulations will apply with respect to the revenue from employment contracts and contracts of mandate. The relief threshold on the revenue obtained between 1 August 2019 and 31 December 2019 will be PLN 35,636.67 which represents 5/12 of the annual limit. In calculating advance income tax on the revenue obtained prior to 1 August of this year the relief will not apply. The only exception is where a taxpayer submits a written declaration to the remitter stating that the revenue obtained by him between 1 August 2019 and 31 December 2019 under an employment or mandate contract will be entirely exempt from tax under the amended regulations concerning the so-called ‘zero PIT’. After being provided with such a declaration, the tax remitter will not deduct income tax advances. The taxpayers who do not submit such declaration will receive a tax refund on account of the relief after they have filed their annual tax return. From 1 January 2020 on, the relief will be taken into consideration by tax remitters in calculating tax advances with no declarations required.

The relief will not release those covered by social and health insurance from the obligation to pay the ZUS and NFZ contributions.

According to the statement of reasons by the Council of Ministers, the amendments to the personal income tax aim to activate young people in the job market by facilitating their entry into that market.

On 15 July 2019, the bill was passed on to the President to sign.

 

Magdalena Walczyńska, Tax Consultant, ATA Tax Sp. z o.o.

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