Warsaw, 29/07/2024. Thirteen significant regulatory changes impacting business operations in Poland, including seven favourable ones, have been recorded. This summary for Q2 of the current year is part of the TMF Group Poland Barometer, prepared by experts from the global administrative services firm with 125 offices in 86 tax jurisdictions, including two offices in Poland.
The TMF Group Poland Barometer is a report created by the company’s Polish team, detailing crucial accounting, tax, and administrative changes affecting business operations in Poland. In the report summarising Q2 2024, experts have compared changes and proposed changes that are beneficial for businesses and those that increase complexity in this area.
In the latest TMF Group Poland Barometer, positive changes for businesses slightly prevail (seven out of 13). Among these, experts highlight the plan to raise the tax-free allowance to an amount equal to twelve times the minimum wage, but no less than 60,000 PLN. This plan began to take shape in Q2 2024 as a draft amendment to the Personal Income Tax Act was submitted to the Parliamentary Finance Committee. For sole proprietors, this translates into additional, untaxed, and therefore higher actual income.
Similarly beneficial for this group of entrepreneurs are the one-month contribution holidays, which are set to take effect from 1 November this year. This change applies to micro-entrepreneurs who insure up to 10 people and whose annual turnover does not exceed 2 million euros.
Another positive change for businesses, according to TMF Group experts, is the work being done by the Ministry of Family, Labour and Social Policy, where sick pay from the first day of an employee’s illness is to be paid by the Social Insurance Institution (ZUS), at a rate of 90, or even 100 percent.
“Currently, an employer pays sick pay to an employee for the first 33 days of illness, with ZUS taking over from the 34th day. Consequently, the employer has to pay 80 percent of the salary during the first 33 days of illness and also manage a replacement. This is a significant burden for businesses, and a change in this regard would be a positive stimulus for all entrepreneurs.” – explains Magdalena Grzegorczyk, TMF Group expert and one of the authors of the TMF Group Poland Barometer.
Also, on the list of positive changes for businesses is the government project announced in April, proposing a new concept for classifying companies by size. The project suggests increasing the thresholds defining various categories of entities by 25 percent. This includes micro, small, medium, and large companies. Thanks to the higher thresholds, some companies will not need to undergo a financial statement audit and will be exempt from preparing consolidated financial statements.
“The proposed changes to the Accounting Act are a response to high inflation in the EU in recent years. The aim is to avoid excessive reporting requirements, especially for micro and small entities. These are sensible and positive changes for businesses as they reduce unnecessary reporting burdens.” – explains Magdalena Grzegorczyk.
Additionally, the planned VAT exemption for foreign companies from the European Union wishing to operate or already operating in Poland is viewed positively. Under the planned change, effective from 1 January 2025, these companies, like their Polish counterparts, would be exempt from paying VAT if their annual turnover does not exceed 200,000 PLN.
Experts also point to planned easements in employing seniors (employer subsidies) and positive changes for family businesses, which the Ministry of Family, Labour and Social Policy plans to make eligible for support instruments when employing family members.
The TMF Group Poland Barometer also includes the ICAP (International Compliance Assurance Programme), a voluntary form of assessing taxpayer risk and ensuring compliance in collaboration with tax authorities. According to the report’s authors, this is a beneficial solution for businesses, albeit with several limitations.
“On one hand, the programme is positive for businesses as it reduces tax risk. On the other hand, its limitation to international groups with a defined tax strategy and policy is a downside. We believe that other taxpayers, struggling with complex tax and accounting regulations, would also benefit from this programme.” – says Magdalena Grzegorczyk.
Among the changes complicating business operations in Poland, experts pointed to the adopted Whistleblower Protection Act and the government’s draft amendment to the Accounting Act regarding sustainability reporting. From a business perspective, these regulations impose extensive procedures, system adjustments, and, in some cases, entire teams dedicated to new tasks.
Additional requirements for employers hiring Ukrainian citizens also adds to the complexity. The notification periods for employing Ukrainian workers have been shortened, and employers must now inform authorities about changes in the type of contract and salary.
The Ministry of Finance’s June 2024 proposal to amend the Local Taxes and Fees Act, effective from 1 January 2025, also caught the authors’ attention. The new regulations include an autonomous definition of buildings and structures, independent of construction law.
“There is a risk of expanding the tax scope to include objects not previously classified as structures, and the range of tax exemptions has been narrowed. Additionally, the new regulations could increase the tax base by including additional elements previously outside the scope of property tax. This is certainly a negative change for business representatives.” – explains Magdalena Grzegorczyk.
Moreover, university lecturers running their own businesses and invoicing for lectures might be dissatisfied with the general interpretation issued by the Minister of Finance in May, which excludes educational service exemptions for external lecturers. Although lecturers do not have to comply with the general interpretation, they risk disputes with tax authorities if they do not.
“The regulatory changes in the Barometer for Q2 2024 slightly favour entrepreneurs. Most of the introduced and proposed changes facilitate business operations, potentially translating into lower operational costs. This is a small improvement compared to Q1 of this year.” – concludes Joanna Romańczuk, TMF Group Director for Central and Eastern Europe.
