Poland

Employee expenses

Non-business expenses reimbursed by the employer are generally taxable for an employee.

Business travel costs, up to a certain limit, can be reimbursed without giving rise to a tax liability.

If school fees/home visits are paid for by the employer, then a taxable benefit arises for the employee.

Personal deductions

Charitable contributions

Donations may be deducted from gross income, subject to numerous conditions and up to the limit of 6% of taxable income.

Internet connection expenses

The Internet connection relief of PLN 760 can only be used by those individuals who would like to take it for the first time in the tax return or already deducted Internet expenses in the previous year only (and not in prior years). It means that it may be used only for two consecutive years.

Free of charge blood donation

A money equivalent (depending on the amount of blood you donate) may be deducted from the tax base, based on the special confirmation stamp in a blood donation book received, at up to 6% of the total income subject to progressive taxation.

Payments made to the individual insurance security account (IKZE)

An income deduction concerns payments made to the non-obligatory IKZE by a taxpayer in a given tax year and cannot exceed the amount equal to 4% of the pension insurance assessment basis for the individual in a previous year, but not more than 4% of annual cap for pension and disability insurance.

Rehabilitation expenses

The taxpayer has a right to deduct from the taxable base expenses for rehabilitation and expenses related to facilitating performance of life activities incurred in the tax year by a disabled taxpayer or a taxpayer supporting a disabled person (e.g. expenditures incurred for adaptation and equipment of apartments and residential buildings to meet the needs arising from disability; adaptation of motor vehicles to meet the needs arising from disability; purchasing and repairing of personal equipment, appliances, and technical instruments necessary for rehabilitation and facilitating performance of life activities, in accordance with the needs arising from disability, with the exception of household equipment). The aforementioned expenses should be properly documented.

As of 1 July 2023, the rehabilitation relief is used by taxpayers who support disabled individuals classified as tax group I in relation to the taxpayer or the taxpayer's spouse. This change applies to income (revenue) earned as of 1 January 2023 in the PIT return filed for 2023.

Currently, the relief is available to disabled dependants: spouse, own and adopted children, strangers' children adopted for upbringing, stepchildren, parents, spouse's parents, siblings, stepfather, stepmother, sons-in-law, and daughters-in-law.

Thermo-modernisation relief 

Introduced from 1 January 2019, the thermo-modernisation relief gives the owners/co-owners of a single-family residential building the opportunity to deduct from the tax base expenses incurred in the tax year for building materials, equipment, and services related to the implementation of the thermo-modernisation project.

The total amount of the deduction cannot exceed PLN 53,000 in relation to all implemented thermo-modernisation projects in individual buildings of which the taxpayer is the owner or co-owner.

Deduction of social security contributions

Employee’s social security contributions can be deducted up to specified limits.

Under some conditions, it is possible to deduct obligatory social security contributions paid in another EU or European Economic Area (EEA) member state or in Switzerland from an individual’s taxable income.

Relief for renovation of monuments

In 2022, the owners or co-owners of properties listed in the Register of Cultural Property were allowed to deduct from their income a portion of the expenses incurred for the renovation and purchase of the historic property.  Starting from 2023, the formula of relief for renovation of monuments changed (as a result of the Polish Deal amendment of July 2022) and currently it will be possible only to deduct expenses incurred for renovation works (under certain conditions) - without the possibility of expenses deduction for the purchase of the historic property. Moreover, these expenses will be deductible after the renovation is approved by the provincial conservator of monuments.

The taxpayer may deduct 50% of the renovation costs incurred for the historic property (with no limit).

Standard deductions

There is a standard deduction for employees. In most typical circumstances, it amounts to PLN 250 per month. The annual limit of tax costs from one's employment currently cannot exceed PLN 3,000. In the case of obtaining income from more than one employment relationship, the upper limit of costs amounts to PLN 4,500.

An individual doing independent work may claim various allowances, depending on the type of activities performed. In most typical situations, the standard deduction amounts to 20% of the revenue. The most favourable treatment relates to revenue from copyrights. As of 2018, the limit applicable to the 50% lump-sum, tax-deductible costs corresponding to remuneration related to creative activities has been increased. Currently, the limit amounts to PLN 120,000 per annum. The advantage applies only to those authors who derive income from certain specific types of activities, including, among others, creative and artistic activities in chosen areas, research and development, academic and scientific activity, audio-visual activity, or journalism.

Personal allowances

Personal allowances are provided as credits against PIT. See the Other tax credits and incentives section for more information.

Business deductions

Individuals running business activities as sole traders or partners in partnerships can deduct all expenses incurred in order to derive revenue or to ‘protect a source of income’. It should be noted, however, that there is also a list of items that are not deductible even if they meet the above general conditions. This list contains over 60 items, including, among others, the following:

• Written-off lapsed receivables.
• Entertainment cost.
• Accrued but unpaid interest.
• Accounting and comparable provisions.
• Tax penalties and penalty interest.

In addition, entrepreneurs conducting innovative activities can take advantage of special deductions from income, i.e.:

• 200% of costs incurred for R&D activities.
• Tax relief for innovative staff allowing cashless refund of unused R&D tax relief.
• Tax relief for prototypes, allowing for additional deduction of pilot series production up to 30% of incurred costs.
• Robotisation tax relief granting additional deduction of 50% of costs incurred on purchase of industrial robots.
• Tax relief for expansion with additional deduction of up to PLN 1 million incurred on increasing revenues of sale of goods.
• Tax reliefs on CSR activities.

Losses

The annual loss generated within a source of income cannot be set off against income generated from other sources. Instead, a taxpayer is entitled to carry such loss forward over the next five years from income derived from the same source.

The amount of the tax loss deduction:

• in the next consecutive years may not exceed 50% of the amount of the loss incurred, or
• in one of the consecutive five tax years, the tax loss may not exceed PLN 5 million (the unrelieved loss is deductible in the remaining years of the five-year period but may not exceed 50% of the incurred loss).