The solidarity levy, although not formally considered a tax, has a similar function and is widely perceived as a third tax bracket, due to its nature and method of collection resembling other fiscal burdens.
The solidarity levy rate is 4%, calculated on the excess of income over one million zlotys per year.
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. In such a case, 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, the lawmakers did not take this into account when introducing the solidarity levy provisions.
Solidarity levy: a legislative oversight is good news for taxpayers
The solidarity levy is regulated in only two articles of the PIT Act – 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 declared in returns “which must be filed in the period from the date immediately following the deadline for filing the declaration on the amount of the solidarity levy in the year preceding the given calendar year, to the deadline referred to in paragraph 4”.
The said 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 the 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 2022 returns will not be included in the base for calculating the solidarity levy payable in 2023, as the deadline for the submission of these returns 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 declared 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.
I have made an undue payment, so I can claim a refund
The lawmakers 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 solidarity levy provisions. Therefore, if you have unduly paid the solidarity levy, you will be entitled to claim a refund of the resulting overpayment.
However, it is worth bearing in mind that the tax administration is reluctant to admit legislative mistakes, so you should be prepared to seek the refund in court.
Summary
- The solidarity levy is commonly referred to as the third tax bracket. It is calculated on the excess of the taxable person’s income over 1,000,000 zlotys. Its rate is 4%.
- According to the literal wording of the legislation, the base for calculating the solidarity levy is income shown in tax returns with a deadline for submission in the period from the day following the expiry of the deadline for submission of the solidarity levy declaration in the year preceding the given calendar year, to the 30th of April of the given calendar year.
- As a result, the income shown in the tax returns for 2022 will not be included in the calculation base, as the deadline for filing these returns was 2 May 2023.
- This income will also not be included in the base for calculating the solidarity levy payable in the next tax year, as the deadline for the submission of the tax returns for such income will be from 3 May 2023 to 30 April 2024.
- Therefore, based on the literal wording of the PIT Act, no obligation to pay solidarity levy on income earned in 2022 has arisen.
- A taxable person who has paid the solidarity levy for 2022 will have the right to seek a refund of such undue payment.
- The tax administration may be reluctant to make a refund resulting from the lawmakers’ oversight, so taxable persons must be prepared to pursue their rights in court.
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