Polish Ministry of Finance confirms income from flat-rate taxed contracts is not exempt under the Young People’s Tax Relief.
Understanding the Young People’s Tax Relief
The Young People’s Tax Relief exempts individuals under 26 years old from Personal Income Tax (PIT) on annual income up to 85,528 zł, which includes the 30,000 zł tax-free threshold.
This relief applies to income from employment, service relationships, cooperative work, contracts specified in PIT Act Article 13 point 8, and completion of internships or apprenticeships.
Applicable Income Sources
The relief covers income derived from employment, service, cooperative, and paid work relationships. It also includes contractual income as defined under PIT Act Article 13 point 8, as well as earnings from internships and apprenticeships.
Additionally, maternity benefits paid to young individuals are exempt from PIT, regardless of the number of contracts or payers, within the statutory limit.
Flat-Rate Tax Contracts
Questions arise regarding a 200 zł contract taxed at a flat rate of 12% under PIT Act Article 30 section 1 point 5a. This tax is applied to gross income without deduction of costs.
The inquiry focuses on whether a person under 26 can avoid PIT on such flat-rate taxed income using the Young People’s Tax Relief.
Ministry’s Clarification
The Polish Ministry of Finance explicitly states on its website (www.podatki.gov.pl) that the Young People’s Tax Relief does not apply to income taxed at a flat rate.