Changes in income taxes in 2019


On January 1st 2019 a series of new regulations regarding income taxes will come into force.

1.Exit tax, i.e. taxation of unrealised profits.

Exit tax will affect legal and natural persons who transfer their assets abroad. As per legal persons, transfer of an asset outside Poland and change in tax residency will be taxed if Poland loses the right to tax sale of an asset. Tax rate will be 19% in such a case. The taxpayer will be able to apply for the split of the tax in instalments, for a maximum of 5 years. In the case of natural persons, transfer of assets worth more than PLN 4 million will be subject to taxation. Exit tax will also be applicable to personal property of a taxpayer, including shares, other securities, derivative financial instruments and participation titles in investment funds, provided that taxpayer had Polish residency for at least 5 years. This is a very controversial, far-reaching regulation, passed in a big hurry, which made it’s provisions unclear and difficult to interpret. The Ministry of Finance promises that it will publish relevant explanations soon.

2. CIT rate reduced to 9% for taxpayers whose revenues during the year will not exceed 1.2 million euro.

The reduced rate year expires during the current fiscal year after exceeding the limit and can not be applied to capital profits.

3.Innovation box (IP Box).

This is a new tax relief in the form of a 5% tax rate on intellectual property rights (IP) income. IP income may be realized in the form of license fees, sale, may be included in the sale price of the product or service or come as compensation for violation of IP rights if it was obtained in dispute proceedings (eg court or arbitration). Intellectual property is considered to include patents, protective rights for a utility model, rights from registration of an industrial design, topography of an integrated circuit, proprietary right to a computer program.

4.New rules for taxation of cryptocurrencies.

The sales revenues from cryptocurrencies will be included in capital profits. Exchange of one cryptocurrency to another is to be tax-neutral, taxation at a uniform rate of 19% will only be applicable to the sum of revenues from sale of cryptocurrencies in a given tax year less the corresponding cost of i.e. documented expenses incurred directly on their acquisition.

5.Defining the rules for settling receivables.

Debt collection companies will be able to deduct the full costs of purchasing debt portfolios at the time of their partial repayment. In other words, only the surplus of amounts received over the purchase price of a given package will be subject to taxation.

6.Hypothetical interest – a new CIT tax relief.

The tax deductible costs will include “hypothetical interest” in the amount not exceeding PLN 250,000 per annum on contributions made by the partners and retained earnings. The interest will be calculated on the basis of the NBP reference rate plus 1%.

7.Withholding tax.

In relation to payments not exceeding 2 mln PLN per year to one tax payer, the current regulations will be applied, i.e. preferential rate will be applicable on the basis of a taxpayer’s certificate of residence. After exceeding the limit, it will be necessary to either collect the tax according to basic rates or submit additional documents such as a statement on possession of relevant certificates of residency and verifying the status of your partner.

8.Solidarity fund tax.

It will be paid by natural persons whose income in the tax year exceeds 1 mln PLN in the amount of 4% of the surplus.

9.Obligation to report tax schemes.

Since 2019 tax advisors, legal counsels, attorneys and others, will be obliged to inform the Tax Office about tax avoidance schemes. The obligation will concern cross-border transactions carried out after June 25th 2018 and domestic transactions after November 1st 2018.

Anna Drzyzga
MDDP Outsourcing