On the consequences of a lack of diligence in legislative drafting using the example of the solidarity levy for 2022
Since administrative courts require adherence to the letter of tax legislation, as long as the content of the provision is clear, careful drafting is crucial. We show what legislative haste can lead to, using the example of the solidarity levy.
According to the linguistic interpretation prevailing in the jurisprudence of administrative courts, the solidarity levy is not due on income earned in 2022.
A few words about the solidarity levy
Although formally not a tax, the solidarity levy is commonly referred to as the ‘third tax bracket’, as it is imposed on PIT payers whose annual income exceeds one million zlotys. Such taxable persons are obliged to pay an additional levy of 4 % of income in excess of one million zlotys.
The base for calculating the levy is, in particular, income from:
- employment
- economic activity
- certain capital gains
- a foreign controlled entity
Taxable persons are required to declare this income by the 30th of April of the following year. The exception is when the 30th of April falls on a Saturday or a public holiday – then, in accordance with the General Tax Code, the deadline is postponed to the nearest business day. This was the case in 2023, when the postponed deadline fell on Tuesday, 2nd of May.
However, this circumstance was not taken into account by the author of the provisions on the solidarity levy.
The current wording of the provisions and its consequences
The solidarity levy is regulated in only two articles of the PIT Act, i.e. Articles 30h and 30i.
Article 30h(3) provides that, in determining the amount of the base for calculating the solidarity levy due in a given calendar year, account is to be taken of income shown in returns “which must be filed in the period from the date immediately following the deadline for filing the declaration on the amount of solidarity levy in the year preceding the given calendar year, to the deadline referred to in paragraph 4”.
Paragraph 4 sets out the deadline for submitting the solidarity levy declaration as follows: “The natural persons referred to in paragraph 1 shall submit to the tax offices a declaration on the amount of solidarity levy, according to the model provided, by the 30th of April of the calendar year and shall pay the solidarity levy by that date. (…)”.
Consequently, income from returns for 2022 will not be included in the base for calculating the solidarity levy payable in 2023, as the deadline for submission did not expire until 2 May 2023. Moreover, this income will also not be included in the base for calculating the solidarity levy payable in 2024, as this base will include income shown in returns whose deadline for submission will expire in the period from the date following the deadline for submission of the solidarity levy declaration in 2023, i.e. – in accordance with Article 12(5) of the General Tax Code in conjunction with Article 30i(1) of the PIT Act – from 3 May 2023 to 30 April 2024.
And how should the provision be worded to produce the effect intended by the legislator
These unexpected consequences would not have occurred if the author of the provision had defined both ends of the period strictly: “which must be filed in the period from the 1st of May in the year preceding the given calendar year and the 30th of April of the given calendar year”, or using staggered deadlines: “which must be filed in the period between the date immediately following the deadline for filing the solidarity levy declaration in the year preceding the given calendar year, to the deadline for filing the solidarity levy declaration in the given calendar year”.
If I have paid unduly, I thus have made an overpayment – so I can claim a refund
The legislator decided that the provisions of the General Tax Code, including those on overpayment, will be applicable to the solidarity levy. This is also confirmed by the tax explanations to the provisions on the levy.
As a result, according to the literal wording of the provisions on solidarity levy, a refund of the levy paid may be claimed, and the General Tax Code provisions define the procedure for such refund.
However, it is worth bearing in mind that the tax authorities are reluctant to admit legislative mistakes, so you should take into account the risk of litigation.
Source: Rzeczpospolita
Date: 19 June 2023
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