From the beginning of September, there was talk of the government abolishing the abolition allowance from the beginning of next year. These provisions made it possible for Poles working abroad to avoid paying double payments income tax. The Sejm has just adopted an amendment to the tax act regulating this issue.
Abolition allowance reduced to an absurd amount
According to gazetaprawna.pl abolition relief in the amendment was not completely removed. However, the deduction limit was reduced to PLN 1,360. This amount is so absurdly low that practically no one will use it, because thanks to the relief, amounts in the tens of thousands of zlotys are redeemed.
As he explains Ministry of Finance This change was introduced because the abolition allowance in its previous form did not implement the tax policy as regards the elimination of double taxation of income and did not induce taxpayers to generate income in Poland. Deputy Minister of Finance Jan Sarnowski stated that as a result of poorly structured regulations, Poles did not pay taxes, neither in the workplace nor in the place of residence. The abolition relief applies to people working abroad and being Polish tax residents. i.e. in Poland they have a center of life interests (i.e. spouse, children), highlights the zonebiznesu.pl.
Poles will pay double PIT tax
Earnings abroad are much higher than in Poland and often exceed 20 thousand. euro annually. This means that in the Polish tax system, such persons catch up to 38 percent. income tax rate. This is a much higher amount than in the Netherlands, Austria or USA, Kazakhstan, Russia and Slovenia, i.e. countries with which Poland has signed double tax treaties.
Until now, it was possible to deduct the amount of tax we paid in the country of employment from the Polish tax. Reducing the amount of the abolition allowance limit from January 1, 2020 will make it possible to deduct a maximum of PLN 1,360. Thus, Poles will pay tax in the country of employment, and then in Poland, where they will be able to count on the exemption only if tax will not exceed the said PLN 1,360. Ministry of Finance tries to explain that the changes will only affect people who live in Poland for less than six months a year, while working abroad. Moreover, the ministry believes that Poles will be able to choose where they want to earn their income, because they will know the rules of settling foreign income.
The abolition of the abolition allowance will lead to the need to delve into this subject, and considering the problems that taxpayers had before 2008 (the tax relief has been in force since this year), it is more than likely that there will be a [płacenia podwójnego podatku PIT – dop. red.] it was from this period when it was decided that the introduction of such a relief was necessary
– says Anna Misiak, vice-president of the CIT / PIT Group of the Tax Council of the Lewiatan Confederation and Partner at MDDP, in a statement for zonebiznesu.pl.