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Calculation of advance payments towards personal income tax (PIT) in 2017

10.01.2017

Maksym Jabłkiewicz for www.infor.pl

The act of 29 November 2016 introduced new regulations concerning income tax threshold and, what follows, modified the rules of calculating advance payments towards PIT.

Let us remind you that as of 2017 the sum reducing the tax will be:
• PLN 1,188 – for annual income up to PLN 6,600,
• PLN 1,188 less the amount calculated as follows: PLN 631.98 x (annual income – PLN 6,600)/PLN 4,4000, for annual income higher than PLN 6,600 but lower than PLN 11,000,
• PLN 556.02 – for annual income higher than PLN 11,000 but lower than PLN 85,528,
• PLN 556,02 less the amount calculated as follows: PLN 556,02 x (annual income – PLN 85,528)/PLN 41,472, for the tax base higher than PLN 85,528 but no higher than PLN 127,000.

Therefore, the change will also affect the rules of calculating the advance payments towards PIT by taxpayers settling income generated on the basis of employment relationship. In another words, for employees who earn annually no more than PLN 85,528, advance payments towards the tax withheld by taxpayers will be reduced by 1/12 of the sum reducing the tax, i.e., PLN 46.33 (PLN 556,02 annually). In order to apply such reduction of monthly advance payments, an employee, as it has been the case so far, will be bound to provide a taxpayer (employer) with a statement for the purposes of calculating monthly advance payments towards personal income tax (form PIT-2).

If, however, an employee’s income for a fiscal year exceeds PLN 85,528, a taxpayer will be bound to calculate advance payment towards tax without taking into account the sum reducing the tax (PLN 46.33) as of the month when the above referred to sum was exceeded. An employee can also submit a statement to a taxpayer indicating that in a given year his or her income will exceed PLN 85,528. Then a taxpayer will be bound to withhold advance payments without taking into account the sum reducing the tax – starting from the month following the month when such a statement was submitted.
One should remember that if the annual tax settlement of an employee shows that his or her income exceeded PLN 85,528, such employee will be bound to reimburse tax authorities for the relevant part of the sum reducing the tax when filing annual tax returns.

Example
An employee earned an annual income of PLN 95,500. In the annual settlement, the sum reducing the tax will be calculated as follows:
PLN 556.02 x (PLN 95,500 – PLN 85,528)/PLN 41,472 = PLN 133.70;
The sum reducing the tax: PLN 556.02 – PLN 133.70 = PLN 422.32.
However, if employee’s income exceed in the annual settlement a sum of PLN 127,000, the sum reducing the tax will need to be reimbursed (if advance payments were fully or partially reduced by it by a taxpayer).

Example
In a year an employee earned PLN 200,000. Let’s assume that for the first 5 months of the fiscal year a taxpayer deducted from his or her advance payments a sum reducing the tax equal to PLN 231.65 (PLN 46.33 x 5). In the end, in the annual settlement such employee will not be entitled to reduce tax by PLN 231.65 (it will need to be remitted to the tax office).

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