Tax card - when do we lose the right to tax the card?

Service-Tax

One of the forms of taxation is the tax card. It is intended for activities carried out to a lesser extent. It is a simplified form of personal income tax charged on business activities. However, the legislator has provided for activities, the performance of which results in the loss of the right to use this form.

The legal basis for the tax card is the act on flat-rate income tax on certain income earned by natural persons. Apart from the flat rate, the tax card belongs to the flat-rate forms of taxation and is characterized by a significant simplification. The only obligation of the person choosing this method of settlements with the tax office will be to pay a monthly, predetermined amount, without the need to keep records and submit declarations. Only by the end of January of the following year you should submit PIT-16A, i.e. information on the health insurance premiums paid.

Loss of the right to tax with a tax card

The catalog of grounds for the expiry of a decision on taxation with a tax card, i.e. resulting in the loss of the right to this form, is specified in Art. 40 of the flat-rate tax act. According to the provision cited, if the taxpayer:

  • provides in the application for taxation in the form of a tax card, data inconsistent with the facts, causing unjustified application of taxation in the form of a tax card or determining the amount of income tax in the form of a tax card in an amount lower than the amount due, or

  • keeps an unreliable (inconsistent with the facts) employment records or, despite the obligation, does not keep such records, and the employment status is higher than the one reported to the head of the tax office, or

  • fails to notify the head of the tax office within the time limit referred to in art. 36 sec. 7, about changes causing the loss of conditions for taxation in the form of a tax card or having an impact on increasing the amount of income tax in the form of a tax card, or the notification will provide data in this respect that is inconsistent with the facts, or

  • in the invoice or invoice stating the sale of a product, goods or performance of a service, it will provide data that is significantly inconsistent with the facts

- the head of the tax office confirms the expiry of the decision on taxation in the form of a card.

Unreliably conducted by the so-called documentation and records constitute the basis for declaring the expiry of the decision on the card by the head of the tax office.

In addition, the right to use taxation in the form of a tax card ceases when the taxpayer's conditions for applying this form of taxation, as specified in Art. 25 of the Lump-sum Income Tax Act. This provision specifies that the taxpayer loses the right to tax in this form when:

  • when running his business, he will use the services of people not employed by him under a contract of employment and the services of other enterprises and plants, unless these are specialist services,

  • undertakes other non-agricultural economic activity, in addition to one of the activities listed in art. 23 of the Lump-sum Income Tax Act,

  • the taxpayer's spouse starts running a business to the same extent,

  • it will produce products subject to excise duty,

  • will perform economic activity outside the territory of Poland,

  • exceeds the permissible level of employment specified for a given type of activity.

Start a free 30-day trial period with no strings attached!

The taxpayer should notify the head of the tax office in writing about the changes that have occurred in relation to the facts specified in the application for taxation in the form of a tax card, which result in the loss of conditions for taxation in this form. To do so, he has 7 days from the occurrence of the circumstances causing the changes.

If the reasons for the expiry of the decision are found, taxpayers are obliged to:

  • pay income tax on general terms for the entire tax year,

  • set up books from the first day of the month following the month in which the decision on the expiry of the decision establishing the amount of income tax in the form of a tax card was delivered.

Tax card - association of the right to use

In addition to losing the right to the card, the taxpayer has the right to opt out of taxation in the form of a tax card. In such a situation, he is obliged to submit a declaration of will to resign from this form. Pursuant to the provisions of the Act, the taxpayer may waive taxation in the form of a tax card within 14 days from the date of delivery of the decision determining the amount of income tax in the form of a tax card or within 14 days from the date of delivery of the decision changing the amount of income tax in the form of a tax card. Until the end of the month in which the taxpayer renounced the application of taxation in the form of a tax card, he is obliged to pay income tax on general terms.

In such a situation, the taxpayer is obliged to pay - by the 20th day of the month following the month in which he relinquished taxation in the form of a tax card - the difference between the amount of income tax calculated on general terms for the period from the beginning of the year to the end of the month in which he resigned taxation in the form of a tax card and the amount of income tax paid in the form of a tax card in the period before tax waiver in this form (Article 32 (3) of the Act).

Loss of the right to the card and the choice of flat tax

Importantly, the loss of the conditions for lump-sum taxation on revenues recorded in the form of a tax card during the tax year does not make it possible to pay income tax in that year on income obtained from non-agricultural economic activity at the 19% rate, the so-called flat tax.

Such a position was confirmed by the Director of the Tax Chamber in Łódź in the individual ruling of March 9, 2012, IPTPB1 / 415-342 / 11-5 / MD, in which we can read:

"(...) the loss of the conditions for lump-sum taxation on revenues recorded in the form of a tax card during the tax year does not allow the Applicant to pay in that year income tax on income obtained from non-agricultural business activities at the rate of 19%, the so-called "flat tax". However, it obliges, starting from the date on which the conditions were lost, to keep a book of revenues and expenses and to pay income tax on general terms, i.e. using the tax scale, pursuant to Art. 27 sec. 1 above the Personal Income Tax Act (...) ”.