The President has signed the so-called ‘Polish New Deal’ Act, which will enter into force from the beginning of 2022. The Act introduces vast changes to the tax and health insurance contributions system. Although the Polish government announced ‘historical tax cuts’, entrepreneurs and higher earners fear for their finances under the new regulation.
Some of the main changes introduced by the ‘Polish New Deal’ Act include:
- The rules for calculating health insurance contributions will change. The contribution will no longer be tax deductible.
- Increasing the tax-free amount to 30,000 PLN.
- Raising the second tax threshold: the 32% tax rate will apply if the income is exceeding 120,000 PLN per year (currently 85,000 PLN).
- Tax relief for the middle-class: PIT reduction is available for people employed under an employment contract or those conducting their own business activity with an annual income in the range of 68,412 and 133,692,01 PLN.
Key Action Points for Human Resources and In-house Counsel
As a result of this new Act, HR departments will need to prepare and adjust their systems to the new rules concerning taxation and health insurance contributions.