New rules of accounting for income tax advances

12 January 2022

The Minister of Finance signed on 7 January 2022 a regulation extending deadlines for payment of personal income tax advances.

The regulation entered into force on 8 January 2022 and imposed new obligations on employers-withholders overnight.

Calculation of income tax advances

Income tax advances deducted by withholders after 8 January 2022 should be calculated both in accordance with the old regulations (in force until 31 December 2021) and, at the same time, in accordance with the new rules introduced by the Polish Deal. Ultimately, the advance tax deducted by the withholder should not be higher than that which he would have deducted in 2021.

If an employee has already been paid his salary in January, the income tax advance withheld in January 2022 should be recalculated also in accordance with the old rules. If it has been withheld in a higher amount, the withholder must refund the difference to the taxpayer.

Please note that if tax is underpaid as a result of applying the new system of collecting the advances, the taxpayer (employee/contractor) will be obliged to disclose in the annual tax return for 2022 and pay to the tax authorities the difference between the advance calculated in accordance with the Polish Deal and the advance calculated in accordance with the old rules. So ultimately he will pay that amount to the tax authorities anyway.

Doubts regarding the regulation

In the context of:

• enormous doubts as to whether the new regulations comply with the Constitution, especially concerning the fact that tax obligations cannot be regulated by a legal instrument inferior to a statute, which has been noted by the National Chamber of Tax Advisers in their official opinion dated 9 January 2022 (https://kidp.pl/aktualnosciall.php/10/7310);
• the fact that compliance with the aforementioned regulation may pose a risk of fiscal crime liability for withholders, and
• the fact that collecting the advances in line with the regulation requires modifications to accounting software and adjusting it to the new requirements (the current software is now adapted to the provisions of the Polish Deal, which took enterprises approximately 3 months);

please be informed that Rödl & Partner experts are working on how to apply the new regulation. We will publish our official opinion and recommendation at the beginning of the next week at the latest.