Economic activity and agricultural activity


The provisions of the act on personal income tax, as a rule, regulate the taxation of all income of natural persons. However, it should be pointed out that the provisions of the Act do not apply to revenues from agricultural activities, except for revenues from special agricultural production sectors. What form of taxation should be chosen if agricultural activity is conducted?

Economic activity in accordance with the Entrepreneurs' Law

Pursuant to the Act on Entrepreneurs' Law, an economic activity should be considered an organized gainful activity, performed on one's own behalf and on a continuous basis. Additionally, the provisions of the act clearly indicate that they do not apply to agricultural activities. As Art. 6 of the Act, the provisions of the Act do not apply, inter alia, for production activities in agriculture in the field of agricultural crops and animal husbandry and breeding, horticulture, vegetable growing, forestry and inland fishing, as well as renting rooms by farmers, selling household meals and providing other services on farms related to the stay of tourists.

Agricultural activity - definition

Agricultural activity pursuant to Art. 2 clause 2 of the Personal Income Tax Act (hereinafter: updof), it is an activity consisting in the production of plant or animal products in an unprocessed (natural) state from own crops or breeding or breeding, including the production of seed, nursery, breeding and reproductive material, field, greenhouse and under foil vegetable production, production of ornamental plants, cultivated and fruit fungi, breeding and production of seed material of animals, birds and utility insects, industrial and farm animal production and fish farming, as well as activities in which the minimum periods of keeping the purchased animals and plants in the course of which their biological growth occurs are at least:

  • month - for plants,

  • 16 days - in the case of highly-intensive specialized fattening of geese or ducks,

  • 6 weeks - for other poultry for slaughter,

  • 2 months - for other animals

- from the date of purchase.

It should be noted that the act clearly indicates what should be understood by agricultural activity. According to the above-mentioned definition, the basic feature of agricultural activity is obtaining unprocessed products, derived from cultivation, rearing or breeding. Thus, agricultural income is only the income derived from the activity specified in Art. 2 clause 2 updof.

Additionally, here it is necessary to refer to Art. 2 clause 1 updof, which indicates that the provisions of the Act do not apply to revenues from agricultural activities, with the exception of revenues from special departments of agricultural production. Start a free 30-day trial period with no strings attached!

Or maybe special agricultural production departments?

The sectors of special agricultural production include revenues from:

  • cultivation in greenhouses and heated foil tunnels, cultivation of mushrooms and their mycelium, cultivation of plants "in vitro",

  • farm breeding and rearing of slaughter and laying poultry, poultry hatcheries, breeding and rearing fur and laboratory animals, breeding: earthworms, entomophages, silkworms, running apiaries, breeding and rearing other animals outside the farm.

At the same time, it should be remembered that the departments of special agricultural production are not: cultivation, breeding or rearing of animals in sizes not exceeding the sizes specified for a given year in Annex 2 of the updof on the standards of estimated income from special departments of agricultural production.

Therefore, a special department of agricultural production is the cultivation of specific plants, rearing or breeding animals, provided that the size of the activity exceeds the amounts specified in the cited annex.

Agricultural activity - what tax?

Entities running an agricultural activity are obliged to pay agricultural tax. In this situation, the subject of taxation will be land classified in the register of land and buildings as agricultural land or as wooded land on agricultural land. Thus, when running an agricultural activity, the taxpayer does not pay tax on the income earned. The tax amount depends on the area and land classification.

Example 1.

Mr. N. is a farmer and has an apiary for 30 bee colonies in which he produces honey for resale. In this situation, the size of agricultural activity does not exceed the estimated standards set out in Annex 2 to the Act, beyond which the sale should be classified as made under special departments of agricultural production. As the appendix shows, only the income obtained from an apiary exceeding 80 bee colonies will be recognized as income from special departments of agricultural production.