In previous weeks, we discussed upcoming changes to VAT and corporate income tax. Today, we'll explore the changes awaiting us in personal income tax.
Cash PIT
The most important change in personal income tax is the introduction of the cash-based tax system. Starting in 2025, entrepreneurs starting their business and those whose revenue from their business in 2024 did not exceed PLN 1 million will be able to recognize income upon receipt of payment, rather than when it is due, as is currently the case. This system addresses the problem of payment bottlenecks, where an entrepreneur not only fails to receive the payment due but also has to pay tax on it. However, the cash-based system will have significant limitations. It will not be used for transactions:
- with the consumer,
- with the entrepreneur, but not documented by invoices issued within the statutory deadline,
- with related entities, where a related entity is understood as having shares and share rights of at least 5%,
- with entities registered in tax havens,
- sales of fixed assets and intangible assets.
To choose the cash accounting method, you must submit a declaration to the appropriate head of the tax office by February 20th. Once you choose the cash accounting method, you will use it indefinitely. However, returning to the accrual method is possible starting in the new year, provided you submit a declaration by February 20th.
The cash-based tax return will be available to taxpayers settling their taxes on a tax scale, as well as on a flat-rate basis and on a lump sum basis.
We wrote about this topic: Cash PIT
Lower tax limits
Simplified accounting, flat-rate taxation on recorded income, and small taxpayer status are contingent on not exceeding a revenue limit of €2,000,000. Quarterly advance payments of flat-rate tax are available for revenues up to €200,000. Since the applicable currency is the Polish złoty, it was assumed that the indicated limits would be converted at the National Bank of Poland (NBP) exchange rate announced on the first business day of October of the previous year. In 2024, this rate was 4.2846.
Maintaining simplified accounting, having small taxpayer status, and paying the lump sum tax will therefore be possible up to PLN 8,569,200 in revenue (a reduction of PLN 649,000). Quarterly advance payments in the lump sum on recorded revenue can be paid by entrepreneurs who achieve revenue of up to PLN 856,920 (a reduction of PLN 64,900).
Tax-free amount, tax thresholds – no changes
Despite political announcements, the personal income tax allowance will not be increased in 2025 and will remain at PLN 30,000. Similarly, the proposal to index the tax threshold, currently set at PLN 120,000, will not be implemented in 2025.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of December 20, 2024
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