New tax limits for 2023

On October 3, 2022 (the first working day of October), the exchange rate of the euro used for calculating tax limits applicable in 2023 was published. This rate was 4.8272. Below are the most important regulations that refer to this exchange rate:

Flat-rate income tax on certain income earned by individuals

In 2023, the lump sum for recorded revenues can be applied by taxpayers whose revenues in 2022 did not exceed the amount of 2,000,000 euros, which, when converted at the rate of October 3, amounts to 9,654,400 PLN.

Quarterly settlements under the lump sum in 2023 are granted to taxpayers who, in 2022, generated revenues from non-agricultural economic activity not exceeding 200,000 euros, which translates to revenue in the amount of up to 965,440 PLN when converted.

Small taxpayer in income taxes

The status of a small taxpayer in PIT (Personal Income Tax) or CIT (Corporate Income Tax) provides many benefits and facilitations for entities that possess it. For example, they have the possibility to pay quarterly advances on tax or to apply the reduced CIT tax rate of 9%.

A small taxpayer, according to the PIT and CIT laws, is an entity whose turnover (including the VAT amount) for the previous year did not exceed 2,000,000 euros, calculated at the rate on the first working day of October. Therefore, in 2023, a business that achieved revenue not exceeding 9,654,000 PLN in 2022 will be considered a small taxpayer.

It is also worth noting that small taxpayers can make one-time depreciation write-offs from the initial value of fixed assets classified in groups 3-8, excluding passenger cars, up to the equivalent of 50,000 euros in total value of these write-offs. Thus, according to the conversion to Polish zlotys in 2023, the total value of depreciation write-offs cannot exceed 241,000 PLN.

9% CIT Rate

The preferential CIT rate of 9% is applied to taxpayers whose revenues earned in the tax year did not exceed, expressed in Polish zlotys, the equivalent of 2,000,000 euros calculated at the average euro exchange rate announced by the NBP on the first working day of the tax year (for a tax year corresponding to the calendar year, this would be the value of 9,357,000 PLN).

However, this preference can only be applied by taxpayers who have the status of a small taxpayer.

Therefore, the preferential rate of 9% can be applied in 2023 by:

• Taxpayers whose gross sales revenue in 2022 did not exceed 9,654,000 PLN, and
• Taxpayers whose net revenue in 2023 does not exceed the product of 2,000,000 EUR and the average NBP euro exchange rate on January 2, 2023, i.e., 9,357,000 PLN (assuming a tax year corresponding to the calendar year).

Small taxpayer in VAT

Taxpayers with the status of a small taxpayer in VAT can choose quarterly VAT settlements and also have the option to apply the cash method.

According to the VAT Act, a small taxpayer is a entrepreneur whose sales revenue (including VAT) did not exceed in the previous tax year, expressed in Polish zlotys, the amount equivalent to 1,200,000 euros calculated at the rate on the first working day of October of the previous tax year. The turnover limit for 2023 is therefore 5,793,000 PLN (rounded to the nearest thousand).

Transition to full accounting

A taxpayer can keep tax revenue and expense records if they meet three conditions:

• They settle tax on general principles according to the tax scale or linearly,
• They conduct business individually or in the form of a civil law partnership of natural persons, civil law partnership of natural persons and a business in inheritance, general partnership of natural persons, limited partnership, or business in inheritance,
• Their net revenue (excluding VAT) from the sale of goods, products, and financial transactions did not exceed 2,000,000 euros in the previous year (converted at the rate on the first working day of October).

Considering the above, entrepreneurs whose revenue for 2022 did not exceed 9,654,400 PLN have the right to use simplified accounting in 2023. Exceeding this limit means the necessity of transitioning to full accounting.

ZUS Contributions:

Additionally, the forecasted average wage amount for 2023 was announced and amounts to 6,935 PLN. Based on this amount, the basis for calculating social security contributions is determined for entrepreneurs paying them on general principles or within the framework of the so-called small ZUS, dependent on income. Additionally, this wage amount sets certain limits for calculating social security contributions for the insured.

It is worth mentioning that the basis for calculating pension and disability insurance contributions cannot exceed in a given calendar year 30 times the forecasted average monthly wage in the national economy for that calendar year. As a result, the limit for the annual basis for calculating pension and disability insurance contributions is 208,050 PLN.