Taxes are an unavoidable part of life. They are also a very efficient way of raising revenue. When you levy taxes, you will get money sooner rather than later. Moreover, every time you levy a tax, it is a new experience for people who are required to pay it. There are many types of taxes in Poland, and the rates and income brackets vary from one type to the other. This article will explain some of the most common types of taxes in Poland to help you manage your finances and budget more responsibly.
Income Tax
There are several income tax brackets in Poland. These brackets apply to individuals and companies. For example, an individual earning up to PLN 15,000 a month will be taxed at 10%. Income between PLN 15,000 and PLN 50,000 is taxed at 12%. And so on. You can also make a voluntary payment if you earn more than PLN 50,000 a month. Tax Return – A tax return has to be submitted every year by the fourth working day of the quarter. For example, the tax return has to be submitted by June 30th. If you don’t submit the tax return, you will be charged a penalty of 5% of the amount that should have been included. Reporting – Every taxpayer has to report all their sources of income, regardless of whether they pay tax or not. This includes money from all jobs, pensions, self-employment, investments, rental incomes, inheritances, lottery wins, and other sources.
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Value Added Tax
There are several types of VAT in Poland. Among these are a standard value added tax, and a reduced rate for food and medicines. Standard VAT – Under this system, the value added tax is imposed on all goods, commodities, and services at the rate of 23%. However, there are some categories of goods and services that are exempt from VAT. These include basic foodstuff, medicines, medical services, and education. Reduced VAT – This is a reduced rate of VAT for foodstuffs, health services, transportation, and housing. All these are subject to the reduced rate of VAT. Foodstuffs under the reduced rate of VAT are bread, cereals, rice, pasta, potatoes, sugar, milk, oil, and baby food.
Capital Gains Tax
Polish tax laws do not differentiate between investments that are made in Poland and those that are made abroad. All investments made in Poland are subject to capital gains tax. And similarly, investments made abroad are subject to the Polish capital gains tax. If you make an investment, you have to report the gain in your tax return. The taxation is done on the basis of the profit-to-loss ratio. What this means is that the gain is calculated as a percentage of the investment amount. The rate of taxation depends on the type of investment. For example, if you make an investment in shares, it is considered as a business investment and is taxed at the company profit rate. A share investment made in a company that owns real estate is considered as a capital asset, and is taxed at the individual rate.
Payroll Taxes – Social Security
Social Security is a type of payroll taxes in Poland. This tax is compulsory, and is reported on your tax return. Social Security is paid in two instalments. The first one is paid by the employer, and the second is paid by the employee. This can be deducted from the income that is declared on your tax return. The rate of social security is 14%. This is deducted from the salary of every employee, and is paid by the employer.
Other Taxes – VAT and Excise Duties
There are a few other taxes that are levied in Poland. Among these are a tax on tobacco and alcoholic beverages. There is a tax on natural resources, such as coal and oil. There is also a tax on air transportation. A tax on tobacco and alcoholic beverages is levied at the rate of 19%. This is a new tax that was introduced in 2018. The rate of the tax will be reviewed in 2022. A tax on natural resources is levied at the rate of 21%. The rate will be reviewed in 2022. A tax on air transportation is levied at the rate of 23% in 2019 and 2021. It will be reviewed again in 2022.
Summary
Taxes are an unavoidable part of life, and are also a very efficient way of raising revenue. When you levy taxes, you will get money sooner rather than later. Moreover, every time you levy a tax, it is a new experience for people who are required to pay it. There are many types of taxes in Poland, and the rates and income brackets vary from one type to the other.
Thinking about starting a business? Are you looking for a place where you can develop? We recommend you to use the services of one of our friendly virtual offices!
