Anti-crisis shields and personal income tax settlement

Entrepreneurs affected by the coronavirus pandemic and the numerous related economic restrictions have used various aid options provided under the Anti-Crisis Shields. Due to the necessity of settling income tax, doubts arise as to which benefits are fully or partially exempt from taxation.

Financial support prepared by the government for entrepreneurs so far has included, among others, the downtime allowance, microloans and non-repayable grants, solidarity allowance, as well as subsidies for employee wages and social security contributions. Entrepreneurs can breathe a sigh of relief – most funds received under the Anti-Crisis Shields are exempt from taxation.

Downtime Allowances

Downtime allowances are exempt from taxation. Expenses paid with these funds may be recognised as tax-deductible costs under general rules. The catalogue of expenses that cannot be considered tax costs can be found in the PIT Act. The above rule also applies to the additional downtime allowance and the one-off additional downtime allowance. This includes downtime allowance requested in connection with work performed under a mandate contract.

Microloans and Non-Repayable Grants

A similar situation applies to microloans and non-repayable grants. The microloan is exempt from income tax. Pursuant to Article 15zzd(10) of the Act of 2 March 2020 on special solutions related to the prevention, counteraction, and combating of COVID-19, other infectious diseases, and crisis situations caused by them, income arising from the loan forgiveness under the terms specified in paragraphs 7 and 7a does not constitute income within the meaning of the provisions on personal income tax or corporate income tax. According to Article 15zzd(10) of the aforementioned Act, income arising from grants provided under the terms specified in paragraph 1 and in the case referred to in paragraph 13 does not constitute income within the meaning of the provisions on personal income tax or corporate income tax.

Solidarity Allowance

Article 14 of the Personal Income Tax Act has been amended by adding Article 52ua, which exempts the amounts of the solidarity allowance from income tax.

Subsidies for Wages and Social Security Contributions under Article 15gg of the COVID-19 Act

Received subsidies for wages and social security contributions are income subject to income tax. Employee wages, on the other hand, may constitute tax-deductible costs for the company.

More information can be found on the National Tax Information website:  https://www.kis.gov.pl/informacje-podatkowe-i-celne/najczesciej-zadawane-pytania/pit/-/asset_publisher/vH2z/content/pit-%E2%80%93-przepisy-tarczy-antykryzysowej?redirect=https%3A%2F%2Fwww.kis.gov.pl%2Finformacje-podatkowe-i-celne%2Fnajczesciej-zadawane-pytania%2Fpit%3Fp_p_id%3D101_INSTANCE_vH2z%26p_p_lifecycle%3D0%26p_p_state%3Dnormal%26p_p_mode%3Dview%26p_p_col_id%3Dcolumn-2%26p_p_col_count%3D1