Recently, lump-sum of taxation as a form of PIT settlement has become an attractive alternative for many entrepreneurs, especially in the IT industry. Since the choice of the form of taxation is made for the entire year “in advance”, we must thoroughly analyze everything before making a decision. One of the most important questions that arise at this stage is the issue of choosing the appropriate lump-sum rate!
What is lump-sum of taxation?
In short: lump-sum taxation is a simplified form of income tax settlement, characterized by a high level of simplification and (in principle) the inability to deduct costs of obtaining income.
We have previously written about the pros and cons of lump-sum taxation.
Potentially, any type of service provided by individuals within their business activities can be subject to lump-sum taxation (from 2% to 17% income tax). However, there are several exclusions and restrictions for specific types of services, and the application of lump-sum taxation requires meeting certain conditions.
More about exclusions and conditions for applying lump-sum taxation (here):
I meet the conditions, but I don’t know which lump-sum rate to choose……
To correctly assign a lump-sum rate to the revenues from the services provided, one should refer to the Act on Lump-Sum Income Tax (direct link: here).
Act on Lump-Sum Income Tax
Article 12, paragraph 1 indicates specific lump-sum rates, assigning them to appropriate types of services/manufacturing activities. This division has been made according to a key that is often controversial, but nevertheless must be adhered to.
How to navigate this – choosing the right PKWiU for my services
According to Article 12, the starting point for the correct choice of the lump-sum rate is the proper classification of the activities/services provided by the taxpayer in accordance with the PKWiU 2008 nomenclature (from 2021, PKWiU 2015). This is important because tax regulations directly refer to these classifications, specifying which services and how they will be taxed.
Helpful in determining PKWiU codes can be the official explanations issued by GUS regarding the analysis of the descriptions of specific PKWiU codes, which are available at this link.
Of course, the decision about the rate is a decision regarding the revenues from the provision of a specific service, not the taxation of all revenues from business activities. In other words, when providing different services, the appropriate lump-sum rate must be chosen for each of them!
Remember, after choosing the appropriate PKWiU code, you must update the PKD codes in CEIDG/Biznes.gov and inform your accounting office!
What if there are doubts?
If you have doubts about the PKWiU classification, you can always contact GUS for the assignment of a classification symbol. You can do this here.
The cost of such an opinion from GUS depends on the number of symbols that need to be assigned, but usually ranges from 60-200 PLN (now: free of charge). However, the waiting time for an opinion from GUS has recently extended from a month to even 8-9 months (now: 12 months).
In this regard, we recommend using the services of a professional because a taxpayer can easily overlook certain formal aspects, which unfortunately may result in further delays by GUS.
What if I choose the wrong lump-sum rate?
Unfortunately, in such a case, the tax authorities will most likely indicate the appropriate (usually higher) lump-sum rate during an audit, which may have significant consequences. In some cases, it will be necessary to correct the advance payments and tax paid to the tax office (usually with an obligation to pay the difference), often also penal interest and the obligation to submit corrections of declarations, as well as to keep a revenue and expense ledger.
Lump-Sum rate – how can we help?
We support our clients by verifying the possibility of applying lump-sum taxation in their activities and helping to choose the appropriate lump-sum rate. This usually requires an analysis of the B2B contract and performed activities, and we prepare relevant calculations. During individual consultations, we explain all questions or doubts and discuss the possibilities of limiting tax risks.
In more complex cases or when wanting to take advantage of lower lump-sum rates (e.g., 8.5%), we assist in the proper analysis of the B2B contract, preparing an opinion for GUS, a tax ruling request to KIS, and indicating the necessary changes to be made in CEIDG.
If you have questions about applying lump-sum taxation, visit us at www.outsourced.pl .
