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    Poland – New PIT Cash Scheme for Entrepreneurs

    GMS Flash Alert 2024-234 | November 26, 2024

    On 30 October 2024, the Act amending the Personal Income Tax Act and certain other acts,1 implementing a solution commonly referred to as the “cash PIT scheme,” applicable as of 2025, was promulgated through publication in the Polish “Journal of Laws” (Dziennik Ustaw Rzeczypospolitej Polskiej).

    The scheme can be applied, on a voluntary basis, by entrepreneurs with revenue that in the preceding taxable year did not exceed PLN 1 million and those only commencing their business activity.

    The new regulations are scheduled to take effect from 1 January 2025.

    WHY THIS MATTERS

    Although there is yet an administrative step to be fulfilled, this new opportunity for entrepreneurs should help ease their overall tax administration burden and help with their cash-flow.

    Foreign national entrepreneurs in Poland, subject to Polish tax law should consider working initially with tax professionals to determine steps that need to be taken in order to to be in compliance with the new law. 

    More Details

    To use the cash PIT scheme, taxpayers may not keep books of account to document their business activities and must submit to the head of the tax office a written statement on the choice of the cash PIT scheme by 20 February of the taxable year, or, in the case of taxpayers starting a business activity during the taxable year, by the 20th day of the month following the month of the start of the activity.

    Under new regulations, entrepreneurs will pay personal income tax only after they are paid for issued goods or performed services while expenses incurred to generate income will be eligible for deduction only upon payment for the purchased goods or services.

    After two years from the date of invoicing, entrepreneurs will be required to recognise the business revenue, even if they have not yet received payment for the goods delivered or services rendered to the contractor.

    KPMG Insights

    The rules in Poland related to the tax treatment of new start-up businesses and income from entrepreneurial activity can be challenging.  Taxpayers impacted by this issue are encouraged to reach out to their qualified tax service provider or a member of the GMS/tax team with KPMG in Poland (see the Contacts section) for assistance or any questions they may have. 

    FOOTNOTE:

    1  See "Rządowy projekt ustawy o zmianie ustawy o podatku dochodowym od osób fizycznych oraz niektórych innych ustaw" on the Sejm's website at: https://www.sejm.gov.pl/Sejm10.nsf/PrzebiegProc.xsp?nr=601 .

    Contacts

    Andrzej Marczak, KPMG in Poland
    Andrzej Marczak

    Partner, Head of Personal Income Tax Services

    KPMG in Poland

    Mateusz Kobyliński
    Mateusz Kobyliński

    Partner, Global Mobility Services

    KPMG in Poland

    grzegorz-grochowina
    Grzegorz Grochowina

    Deputy Director

    KPMG in Poland

    Additional Resources

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    Disclaimer

    The information contained in this newsletter was submitted by the KPMG International member firm in Poland.

    GMS Flash Alert is a Global Mobility Services publication of the KPMG LLP Washington National Tax practice. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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