After the announcement of the euro exchange rate by the NBP on the first business day of October, it became clear that tax limits would increase in 2021. This particularly applies to limits for small VAT taxpayers, personal income tax (PIT), corporate income tax (CIT), and the threshold for using lump-sum tax accounting. Who qualifies as a small taxpayer, and what will be the limits in 2021?
Who is a small taxpayer?
A small taxpayer is an individual or legal entity that earns relatively low revenues annually. In 2021, these will be individuals or companies whose revenues did not exceed the amount of 5,418,000 Polish złoty in 2020. Small taxpayers may use the cash method of VAT accounting, meaning they can pay VAT after receiving payment from the contractor and deduct VAT from purchases after paying for them. They can also benefit from a one-time depreciation of up to 50,000 euros annually and from the so-called tax credit (PIT) when starting a business. The calculation of the limits for small taxpayers for PIT, VAT, and CIT is made in the same way – based on the euro exchange rate on the first working day of October of the previous tax year, rounded to the nearest 1000 zł.
The limits for small taxpayers for PIT, VAT, and CIT.
For a small PIT taxpayer, the limit is 2,000,000 euros. Since the euro exchange rate on the first working day of October was 4.51 PLN, which was higher than a year ago, in Polish złotys, it will be 9,031,000 PLN. For a small VAT taxpayer, the limit is 1,200,000 euros, which translates to 5,418,000 PLN. For a small intermediary taxpayer, the limit is 45,000 euros, which is 203,000 PLN. Meanwhile, the sales limit for a small CIT taxpayer is set at 2,000,000 euros, equivalent to 9,031,000 PLN, the same as for a small PIT taxpayer. Regarding entrepreneurs who settle tax using the flat-rate tax on registered revenues, there will also be changes to the revenue limit. This limit will not apply to entities commencing operations. Choosing this form of settlement will require submitting a relevant declaration by January 20, 2021. The flat-rate limit under current regulations is 250,000 euros. In Polish złotys, this will be 1,128,825 PLN, for both individual entrepreneurs and civil partnerships. It is important to remember that a small taxpayer is entitled to a one-time de minimis depreciation. The total depreciation amount cannot exceed 50,000 euros, which is 226,000 PLN. This is 7,000 PLN more than in 2020.
PKPiR or accounting books in 2021?
Individuals with income in 2020 lower than 9,030,600 Polish złoty will be able to use simplified accounting in the Tax Revenue and Expense Ledger (PKPiR) in 2021. For incomes exceeding this amount, full accounting in accounting books will be required. This applies to civil and general partnerships with only individual shareholders, as well as to partnerships.
Summary of tax thresholds for 2021
All tax thresholds for 2021 are as follows:
| limit | Amount in euros | Amount in PLN |
| De minimis depreciation | 50 000 | 226 000 |
| Small taxpayer PIT/CIT | 2 000 000 | 9 031 000 |
| Small taxpayer VAT | 1 200 000 | 5 418 000 |
| Small intermediary tax | 45 000 | 203 000 |
| Flat-rate tax on recorded revenue | 250 000 | 1 128 825 |
| Possibility of keeping simplified tax records | 2 000 000 | 9 030 600 |