A contract for specific work without PIT advance payment may be relevant both for contractors and for businesses acting as tax remitters. In an article published in Rzeczpospolita, dr Piotr Sekulski, tax advisor, commented on when PIT withholding may be skipped under a contract for specific work and what conditions must be met.
Contract for specific work without PIT advance payment – when is it possible?
As a rule, a business paying remuneration under a contract for specific work acts as a tax remitter and should withhold an advance payment of PIT. However, as shown in the article published in “Rzeczpospolitej“, the regulations provide for an exception in this area.
dr Piotr Sekulski, tax advisor
„The obligations of a tax remitter arise directly from the law and there is no discretion here. The remitter must fulfil them, whether they like it or not. But there is one way out of this situation.”
This concerns Article 31c of the Polish PIT Act. Under this provision, the remitter does not collect PIT advances if the taxpayer submits an appropriate request and expects that their income taxed according to the tax scale will not exceed the annual tax-free amount, i.e. PLN 30,000.
dr Piotr Sekulski, tax advisor
„If the remitter receives such a request, they pay the taxpayer the full amount of remuneration, because in the analysed situation they also do not have to deduct social security contributions. After the end of the year, however, they will still have to send a PIT-11 information return to the tax office and to the taxpayer”.
Contract for specific work without PIT advance payment – where does the risk arise?
The article also highlighted a practical problem connected with estimating annual income. This is particularly relevant where, apart from the contract for specific work, the contractor also runs a business activity or earns income from other sources.
This shows that the formal possibility of filing such a request does not always mean that the solution will be safe or practical in a given case. In practice, it is necessary to look more broadly at the taxpayer’s situation, the structure of their income and the way their annual tax return will ultimately be settled.
Summary
A contract for specific work without PIT advance payment is therefore possible, but it does not apply automatically and it will not be a good solution in every case. What matters is both Article 31c of the Polish PIT Act itself and a realistic assessment of whether the taxpayer actually meets the conditions allowing such a request to be submitted.
Our commentary shows that even in relatively simple settlements involving a contract for specific work, it is worth analysing in advance the obligations of the tax remitter, the taxpayer’s scope of responsibility and the practical risks related to not withholding PIT advances.
