Polish Deal adopted by the government – new health insurance contribution rate as of January
On September 8, 2021 the government adopted a bill amending the act on personal income tax, the act on corporate income tax and certain other acts, i.e. the so-called ‘Polish Deal’.
The adopted bill, which as per schedule will come into force at the beginning of 2022, includes several changes in relation to the primary assumptions presented by the Ministry of Finance. Among the most significant changes, one should indicate the modification of the amount of health insurance contributions paid by entrepreneurs.
Currently, the health insurance contribution amounts to 9% of the contribution calculation base.
The base is a declared amount, not less than PLN 4 242.38 (which constitutes 75% of the average monthly remuneration in the corporate sector, which in the fourth quarter of 2020 amounted to PLN 5 656.51). It means that, currently the health contribution paid by entrepreneurs is flat and amounts as a matter of principle to PLN 381.81. However, the actual level of the liability is lower, as entrepreneurs can deduct 7.75% of the base of its assessment from tax.
In the original version, the draft of the Polish Deal assumed maintaining the health insurance contribution rate at the level of 9%, while changing the method of its calculation and eliminating the possibility of deducting the 7.75% of its base.
In accordance with the current proposed draft, as of January 1, 2022, the basis for the assessment of the health insurance contribution is to be the actual income generated from the activity conducted - income is to be the basis for the assessment of the contribution for those paying income tax according to the standard tax rates, at a 19% tax rate and those paying income tax on qualified intellectual property rights. In consequence, instead of a fixed lump sum, the amount of health contribution will be determined for each entrepreneur individually.
However, during tax consultations, the proposed solutions encountered harsh criticism from the business side, which forced the Ministry of Finance to take into account the comments made.
However, the implemented changes, in terms of health contributions turned out to be minor, because in draft adopted by the government the health insurance contribution has only been reduced for taxpayers taxed at a flat rate. According to the new version of the draft, it amounts not to 9%, but 4,9%. This change, however, cannot be deemed as favourable, because of the rules for calculating health insurance contributions on the basis of the actual income and the lack of right to deduct the contribution from tax have remained unchanged.
Natalia Szymocha, Tax Consultant, ATA Tax Sp. z o.o.
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