Agricultural activity - when is it an economic activity?
The provisions of the PIT Act do not apply to income from agricultural activity (except for income from special departments of agricultural production). Therefore, in order to determine whether a given activity constitutes agricultural activity or not, it is necessary to analyze what is economic activity and agricultural activity, which are specified in the PIT Act.
Agricultural activity - definition
Pursuant to Art. 2 clause 1 point 1 of the PIT Act, agricultural activity is not subject to income tax, except for revenues from special departments of agricultural production.
An agricultural activity 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, vegetable production in the field, greenhouse and under foil, production of ornamental plants , cultivated and orchard fungi, breeding and production of seed material of animals, birds and commercial insects, industrial and farm animal production and fish breeding, as well as activities in which the minimum periods of keeping purchased animals and plants, during 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.
Thus, only if the farmer sells unprocessed products from his own farm, he will not be obliged to pay income tax.
The agricultural tax is the equivalent of 2.5 dt of rye / conversion ha - the price of rye for agricultural tax for 2017 is PLN 52.44 per 1 dt.
In the case of agricultural activity, farmers do not keep a book of revenues and expenditures or accounting books.
For example, the sale of milk or live calves is subject to agricultural tax. Such a position was confirmed by the Director of the Tax Chamber in Katowice, included in the individual ruling of May 21, 2015, file ref. IBPBI / 1 / 4511-171 / 15 / WRz, where we can read:
(...) the sale of milk and live calves from own breeding, obtained as part of the farm, does not generate income from special departments of agricultural production, but income from agricultural activity, to which the provisions of the Act on tax on natural persons do not apply. As a consequence, the income obtained from this activity (from the sale of milk and calves obtained as part of the farm) is not subject to personal income tax, and is not combined with income from other sources of income, including non-agricultural economic activity ( …).
The tax authorities also confirm that the sale of spruce trees is taxed with agricultural tax. Such a position was presented by the Director of the Tax Chamber in Bydgoszcz in a letter of 16 January 2015, ref. No. ITPB1 / 415-1072 / 14 / DP, where we can read:
(...) the activity that the Applicant will perform falls within the definition of agricultural activity quoted above (the storage period of plants is 2 years), and is not included in the special departments of agricultural production, because the production of seedlings of ornamental trees and shrubs and the plantation of Christmas trees in the open ground space, as a type of cultivation and production, was not covered by the above-mentioned of the annex, ie the table of types and sizes of special departments of agricultural production and the standards of estimated annual income. Consequently, the revenues obtained on this account in accordance with the content of Art. 2 clause 1 point 1 of the Personal Income Tax Act, the provisions of the Personal Income Tax Act shall not apply.
In this case, pursuant to Art. 2 clause 1 point 1 of the Personal Income Tax Act, the revenues obtained from the sale of own-produced Christmas trees will also be excluded from personal income tax (...).
However, pursuant to Art. 2 clause 3 of the PIT Act, special departments of agricultural production are: 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 animals and laboratories, earthworm breeding, entomophagous breeding, silkworm breeding, running apiaries as well as breeding and rearing other animals outside the farm. However, according to Art. 2 clause 3a above of the Act, do not constitute special departments of agricultural production - cultivation, breeding and rearing of animals in sizes not exceeding the sizes specified in Annex 2 to the Act, called "Annex 2".
The definition of economic activity or non-agricultural economic activity under the PIT Act is set out in Art. 5a point 6 of the PIT Act, according to this provision it is a gainful activity:
manufacturing, construction, commercial, service,
consisting in searching for, identifying and extracting minerals from deposits,
consisting in the use of things and intangible assets
- conducted on its own behalf, regardless of its result, in an organized and continuous manner, from which the revenues obtained are not included in other revenues from the sources listed in art. 10 sec. 1 points 1, 2 and 4-9 of the PIT Act.
Taxation of special departments of agricultural production
When running special departments of agricultural production, taxpayers have two ways to determine income:
on the basis of kept books (KPiR or accounting books),
according to estimated standards.
Taxpayers who determine the income from special departments of agricultural production using the standards of estimated income from a specific area of crops or livestock production units, are required to submit declarations to the tax office by 20 January of the tax year according to the established formula on the types and sizes of intended production in the tax year ( PIT-6).
Taxpayers are required to notify the head of the competent tax office within seven days of:
there are changes in the production carried out in relation to the one specified in the declaration,
cessation or commencement of operation during the year of facilities enabling a year-round production cycle,
starting special departments of agricultural production during the tax year.
For those running special departments and determining income according to estimation standards, the Minister of Finance determined the amount of these standards for 2018 by the ordinance of 8 December 2017 on the standards for estimating income from special departments of agricultural production (Journal of Laws of 2017, item 2393).