Many entrepreneurs who settle their accounts on the basis of a flat-rate tax and a tax card wonder what the rules are for paying tax on recorded income obtained on the basis of these two simplified forms of settling accounts with the tax office. It should be remembered that the rules for paying tax and its calculation differ significantly depending on whether the taxpayer settles on the basis of a flat-rate tax or a tax card.
What is a flat rate? Flat rate rates
Taxpayers who decide to use taxation in the form of a tax card and/ or lump sum they must know what obligations are associated with correct tax settlement and what the tax offices require. Lump sum tax on recorded revenues is a possibility of simplifying income tax settlements. All income of individuals and entrepreneurs obtained from lease, sublease, tenancy agreements, as well as other agreements of a similar nature, activities of clergy, non-agricultural business activity, as well as under Article 20, paragraph 1c of the Personal Income Tax Act are subject to flat-rate taxation. Persons entitled to use this form of taxation are individuals who achieve income from business activity not exceeding €2.000.000 per year. The legislator decided to increase this amount, because previously it amounted to only €250.000.
In the case of flat-rate tax on recorded revenues there are different rates. It is worth knowing that flat rate may range from 3 to 17%. One of the essential requirements for using the above-mentioned form of taxation is to keep records on the basis of which the taxable income should be determined.
Also check: Lump-sum tax – who is entitled to lump-sum income tax?
Tax card - rules for settling accounts with the tax office
Tax card is the simplest form of taxation, where the tax is determined by the head of the Tax Office, based on data provided by the taxpayer. This is a solution for entrepreneurs conducting micro-businesses who do not have many tax costs. In the case of this form of taxation, there is no need to keep accounting records, determine the income required for taxation, file tax returns, or pay income tax advances, and the amount of tax for people settling their taxes on the basis of the tax card is determined based on various factors, such as:
- number of people employed in a given company,
- number of inhabitants in a given location where the business is conducted,
- type of business activity conducted.
The decision issued by the head of the Tax Office for a given tax year regarding the tax rate is then the basis for settling the tax.
Tax in the form of a tax card must be paid by the 7th day of each month for the previous month, and in December – by 28 December. This tax may be additionally reduced by the amount of health insurance paid in a given tax year, up to 7,75% of the contribution assessment base.
Lump sum and tax card – tax payment, suspension or liquidation of business
Lump sum settlements on recorded revenues must be made by the 20th day of the following month, and for December before the deadline for submitting the tax return. The flat-rate tax can also be settled quarterly. by the 20th day of each month, after the end of the selected quarter. This rule may be applied by taxpayers starting their business activity and achieving revenues that did not exceed €200.000 in the previous tax year.
About choosing the quarterly form of tax settlement taxpayers are required to inform their tax office in the annual return submitted to this institution for a given calendar year. In the event of suspension of business activity, taxpayer settling on the basis of the tax card and/ or lump sum must notify the Tax Office about this.
When a business is liquidated during the tax year, tax in the form of a tax card for the last month of running the business, the fee is charged proportionally for the period until the day of cessation of business activity, in the amount of 1/30 of the monthly fee for each day.
People who settle their taxes on a lump sum basis are exempt from the obligation to settle it during the period of suspension of their business activity. The lump sum must be paid again after resuming business activity by the 20th day of the following month or in the quarter when business activity was resumed.
Correct settlement of revenues recorded in the form of a tax card and/ or lump sum is an obligation for people who have reported this form of taxation to their tax office. People using the simplified form of taxation should know the rules for paying taxes, mainly in terms of deadlines set in tax law.
http://isap.sejm.gov.pl/isap.nsf/download.xsp/WDU19981440930/U/D19980930Lj.pdf
