Checked lump sum - a compendium of knowledge

Service-Tax

The registered lump sum is a simplified form of taxation of economic activity. Entrepreneurs using this form of settlement pay income tax, thus they cannot reduce the tax by the costs of obtaining it. This form of taxation may be used by entrepreneurs conducting business activity in the form of an individual or a partnership. When does this form of tax settlements pay off? We explain in the article.

Checked-in lump sum must be reported to the Tax Office!

An entrepreneur, in order to be able to settle accounts on the basis of a lump sum recorded from the beginning of the company's existence, should submit a written statement on the choice of this form of taxation to the head of the tax office competent according to the place of residence. The application should be made by the day preceding the day of commencement of activity - but not later than on the day of obtaining the first income. Taxpayers may also choose the form of taxation already on the CEIDG-1 registration application. On the other hand, if the taxpayer obtains income from rental or lease, then from January 2019 he does not have to submit a declaration.

However, when the transition to a registered lump sum is to take place already in the course of conducting business, the notification to the head of the tax office should be submitted by the 20th day of the month following the month in which the first income on this account was achieved in the tax year or by the end of the tax year, if the first such income was achieved in December of this fiscal year. If the activity is or is to be conducted in the form of a partnership, such a declaration should be submitted by all partners - each at their own tax office competent according to the place of residence.

Who cannot take advantage of the lump sum?

Not every entrepreneur can settle accounts on the basis of a registered lump sum. The Act of 20 November 1998 on flat-rate income tax on certain revenues earned by natural persons from among the eligible taxpayers excludes, inter alia, all those who conduct business activities in the field of:

  • running pharmacies,

  • buying and selling foreign exchange values,

  • trade in parts and accessories for motor vehicles.

  • production of products subject to excise duty, on the basis of separate regulations, with the exception of the production of electricity from renewable energy sources.

The lump sum also does not apply to taxpayers who undertake activities in the tax year after changing their activities:

  • independently for business conducted in the form of a partnership with a spouse,
  • in the form of a partnership with a spouse for business. which will be run independently by one or each of the spouses,
  • independently by the spouse for activities that will be conducted independently by the other spouse

- if the spouse or spouses before the indicated change paid tax for this activity on general principles.

The lump sum may not be paid by a person who was or is employed under an employment contract and intends to conduct his own business and perform under it - for the former or current employer - the same activities that he performed in the year preceding the tax year or in the tax year as part of an employment relationship. In the event that the taxpayer sells commercial goods or products, or obtains income from the provision of services to the former or current employer, he loses the right to a lump sum on recorded income and - starting from the date of obtaining this income until the end of the tax year - must pay the income tax on general terms.

Checked-in lump sum - watch out for limits!

Entrepreneurs may pay the tax in a flat-rate form, provided that in the previous year:

  • they obtained income from activities conducted exclusively on their own, in the amount not exceeding EUR 2,000,000 or

  • they obtained revenues only from activities conducted in the form of a company, and the sum of revenues of the partners of the company from this activity did not exceed the amount of EUR 2,000,000.

Entrepreneurs starting a business in a given tax year, who do not use a tax card, may tax their business with a lump sum, exceptionally disregarding the turnover limit (EUR 2,000,000). This means that a beginner entrepreneur who exceeds the limit in the first year of business does not lose the right to settle with the registered lump sum. Only in the following years will it be obliged to keep the turnover limit.

Lump sum limits on recorded income expressed in EUR are converted into the Polish currency at the average EUR exchange rate announced by the National Bank of Poland, applicable on the first business day of October of the year preceding the tax year. Therefore, the limit for entities continuing operations in 2021, converted into PLN, is: PLN 9,030,600.

Checked lump sum rates

Lump sum tax is payable on revenues from economic activity, i.e. revenues from the sale of goods or services, not reduced by any costs of this activity. The amount of the tax rate depends on the type of business. The lump sum rates in 2021 for business activities are: 17%, 15%, 12.5%, 10%, 8.5%, 5.5%, 3% and 2%. It is possible to pay a lump sum at one of the above rates or at several rates - if the activity is diverse. Lump sum rates for taxable activities are listed below.

The 17% flat rate on recorded revenues applies to the activities of:

  • income obtained in the field of liberal professions, i.e. non-agricultural economic activity performed personally, exclusively for the benefit of natural persons by:
    • doctors, dentists, veterinarians,
    • dental technicians,
    • medical assistants, midwives, nurses,
    • explains,
    • teachers in the provision of educational services by giving lessons by the hour.

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The 15% flat rate on recorded revenues applies to the activities of, among others:

  • providing services:
    • parking,
    • related to accommodation,
    • in the field of software,
    • photographic,
  • dealing with:
    • reproduction of computer information carriers,
    • consultancy in the field of computer hardware,
    • operation of the radio-taxi center,
  • intermediaries in:
    • wholesale,
    • wholesale of passenger cars and their parts and accessories,
    • sale of motorcycles and their parts and accessories.

The 10% registered flat rate applies to revenues:

  • from the sale of property rights or real estate for consideration, being:
    • fixed assets or intangible assets subject to inclusion in the list of fixed assets and intangible assets,
    • the components of the property referred to in Art. 22d paragraph. 1 of the Income Tax Act, with the exception of components whose initial value, determined in accordance with Art. 22g of the Income Tax Act, does not exceed PLN 1,500,
    • assets which, due to the expected period of use equal to or shorter than one year, have not been included in fixed assets or intangible assets,
    • assets constituting a cooperative right to a business premises or a share in such right, which are not included in the list of fixed assets and intangible assets,
    • assets of the enterprise in decline

- irrespective of the period of their purchase, even if they were withdrawn from non-agricultural economic activity before the sale, and between the first day of the month following the month in which the asset was withdrawn from activity and the date of its sale, six years have not elapsed.

The 8.5% flat rate (up to PLN 100,000) and the 12% flat rate (over PLN 100,000) apply to revenues:

  • referred to in Art. 6 sec. 1a,
  • referred to in Art. 14 sec. 2 point 11 of the Income Tax Act,
  • for the provision of accommodation services (PKWiU division 55),
  • from the provision of rental and servicing of own or leased real estate (PKWiU 68.20.1),
  • on the provision of services in the field of scientific research and development works (PKWiU division 72),
  • from rent and lease:
    • passenger cars and vans, without a driver (PKWiU 77.11.10.0),
    • other motor vehicles (excluding motorcycles), without a driver (PKWiU 77.12.1),
    • means of water transport without crew (PKWiU 77.34.10.0),
    • unmanned air transport means (PKWiU 77.35.10.0),
    • rail vehicles (without service) (PKWiU 77.39.11.0),
    • containers (PKWiU 77.39.12.0),
    • motorcycles, caravans and cars with a living quarters, without a driver (PKWiU 77.39.13.0),
    • intellectual property and similar products, excluding works protected by copyright (PKWiU 77.40),
  • from the provision of social welfare services with accommodation (PKWiU section 87), other than provided within the framework of liberal professions;

The 8.5% registered flat rate applies to the following activities:

  • service, including catering, in terms of revenues from the sale of beverages containing more than 1.5% alcohol (except for those listed below as subject to the rate of 5.5% or 3%),
  • consisting in the production of objects (products) from the material entrusted by the ordering party.

This flat rate also covers all revenues from:

  • commission obtained by a commission agent from sales under a commission contract,
  • commission obtained by a press distributor on the basis of a press distribution agreement,

The following services are also subject to the 8.5% flat rate:

  • fighting fires and preventing them,
  • in the field of education (PKWiU division 85), other than those provided as part of freelance professions,
  • related to the activities of libraries, archives, museums and other cultural services (PKWiU division 91),
  • referred to in Art. 14 sec. 2 point 12 of the Income Tax Act;

The 5.5% flat rate on recorded revenues covers revenues from:

  • running a manufacturing activity,

  • construction works or the transport of loads using a fleet of vehicles with a capacity of more than 2 tons,

  • sale of certificates of origin, referred to in art. 14 sec. 2 point 14 of the Personal Income Tax Act.

This flat rate also applies to commissions from commercial activities in the field of sales:

  • single-use public transport tickets,

  • stamps for monthly tickets,

  • postage stamps,

  • tokens and magnetic cards for slot machines.

The 3% flat rate on recorded revenues covers all revenues from:

  • catering activities, with the exception of revenues from the sale of beverages with an alcohol content exceeding 1.5%,

  • trade service activities,

  • activities of sea and floodplain fishermen in the sale of fish and other raw materials from their own catches, with the exception of canned and preserves of fish and other raw materials from the catch,

  • sale of assets related to business activity against payment (except for real estate, which is taxed with 10% tax),

  • services related to animal production (except veterinary services),

  • sale of movable assets of the enterprise inheritance for consideration.

And:

  • some subsidies and subsidies,

  • interest on funds in bank accounts related to the conducted business activity,

  • redeemed or lapsed liabilities,

  • benefits in kind and other gratuitous benefits,

  • remuneration of payers.

The 2% flat rate on recorded revenues covers the following revenues:

  • from the sale of non-industrial plant and animal products referred to in art. 20 paragraph 1c of the Personal Income Tax Act.

Checked-in lump sum - revenue record

Settlement of income on the basis of a registered lump sum requires simplified accounting in the form of a record of income. It is conducted separately for each tax year. Only revenues from conducted business activity are included in the revenue record. However, there is no need to record costs, as with this form of taxation they are not taken into account when determining the amount of tax. However, you need to collect and store proof of purchase of goods in the event of an inspection by the tax office.

On the other hand, when it comes to the method of keeping records of revenues, the legislator allows for the possibility of recording sales both manually and with the use of specialized computer programs. In both cases, the same formula for its creation must be followed (e.g. the arrangement of boxes). It is not necessary to inform the tax office about its establishment. If the records are kept on their own, they should be kept at the place of business or in a place indicated as the company's seat.

When carrying out a business activity taxed in the form of a lump sum, in addition to the income record, other records should also be kept, such as a record of fixed assets or employment records. However, it is only necessary if the company has fixed assets or employs employees.

Income tax and registered lump sum

In business activities that are settled on the basis of a recorded flat rate, each income is subject to taxation. On the other hand, this concept covers the amount due for the sale of goods or services (reduced by output VAT if the taxpayer is an active VAT payer) and other revenues obtained related to business activity, such as:

  • benefits in kind,

  • free benefits,

  • revenues from the sale of assets used to carry out this activity,

  • compensation for damages to this property,

  • subsidies,

  • interest on funds in bank accounts maintained in connection with the conducted business activity.

  • exchange differences.

Tax settlements with the tax office may be made on a monthly or quarterly basis, previously notified.

Quarterly settlement may be used by taxpayers whose revenues from independent activities or the company's revenues - in the year preceding the tax year - did not exceed the amount equivalent to EUR 200,000.
In 2021, this limit, expressed in Polish zlotys, is PLN 903,060.

Social security contributions should be subtracted from the sum of income for the entire billing period. The resulting amount is the basis for taxation at an appropriate flat rate. Then the calculated tax is reduced by the part of the health insurance contribution (not by the entire 9% paid, but only by 7.75% of the contribution). As a result, the periodic lump-sum income tax necessary to be paid is established.

In addition, entrepreneurs paying a lump sum at the end of the tax year may deduct donations for social purposes from their income when preparing their annual tax return. However, it should be remembered that in some situations, donations may be tax-deductible. Such costs may include, inter alia, costs of purchasing or producing food products (except alcohol), which will be donated to a public benefit organization for charity. Additionally, entrepreneurs may reduce their income by expenses covered by rehabilitation or thermo-modernization relief.

The final settlement of income tax takes place at the time of submitting the annual tax return. The PIT-28 form is used for this, which must be submitted by the end of February at the same tax office competent for the place of residence on the last day of the tax year for which the tax return is submitted.

If, in addition to income from business activity, taxed with registered flat rate, other income was obtained during the year (e.g. from work, contracts of mandate or for specific work), a separate annual tax return must be submitted by 30 April on the appropriate form. However, this declaration does not show any lump sum income.