Tax treatment of IT sector workers – the Polish Deal (Polski Ład) package

A large-scale tax reform took effect as of 1 January 2022, named the Polish Deal by the Polish government. Primarily, the aim of the amendment was to increase the tax burden on the middle and upper classes, but the package also contains notable provisions that affect tax treatment of IT sector workers.

In practice, in Polish IT firms, a large portion of programmers and other workers in specialist fields are self-employed and work on B2B contracts under which a programmer is treated as a person who runs their own business. There is a major change with respect to workers of this kind, which is the option of paying tax at a flat rate of 12% on their revenue. This tax is paid on their revenue, and not income earned by the individual in question, which means that purchases such as their own computer or leasing of a car are not tax deductible. Paying tax in this way is particularly beneficial for people who have a business that does not generate extra costs. This is because the alternative to this model is taxation of business income at a linear rate of 19%. The form of taxation chosen will also be affected by the rate of health insurance contributions, which were changed as of the beginning of the year and differ for these two forms of taxation.

For people who have employment contracts and run their own business, the middle-class tax relief has been introduced. This applies only to people of annual revenue not exceeding PLN 133 692. This tax relief is calculated in the following way:

Annual revenue from employment and from self-employment in PLN (A)Amount of relief
from PLN 68 412  to PLN 102 588[A x 6.68% – 4 566 PLN] ÷ 0.17
over PLN 102 588 PLN to PLN 133 692[A x (-7,35%) + 9 829 PLN] ÷ 0.17

In the case of self-employment, “A” means revenue less deductible costs for operating an enterprise, while social security contributions are excluded from those costs.

For people who have employment contracts who deduct their copyright costs from their income, the limit on those copyright costs that are deductible has also been increased to PLN 120 000. Paying tax in this way, using a fixed rate of costs to deduct from income, i.e. the tax base, has been increasingly popular among IT sector workers in Poland for a number of years.