Response to the interview of Mr Kacpra Plażyński

Dear Marshal,

in connection with the interpelling No. 14078 of Mr Kacpra Plażyński at the Sejm of the Republic of Poland concerning the implementation of the judgment of the Court of Justice of the EU of 8 May 2019 concerning the social security of seafarers employed by EU shipowners on ships of the so-called convenient flags and the elimination of the abolition relief for seafarers, I present the following explanations on the changes in the application of the abolition relief for seafarers.

The amendments to the rules on the application of the abolition allowance referred to in Article 27g of the Personal Income Tax Act (Journal of Laws of 2020 item 1426, as amended, hereinafter referred to as the ‘PIT Act’), were introduced by the Act of 28 November 2020 amending the Personal Income Tax Act, the Corporate Income Tax Act, the Flat-rate Income Tax Act on certain revenues generated by individuals and certain other laws (Journal of Laws of 2020 item 2123), hereinafter referred to as the ‘Law’.

With regard to taxable persons, income tax on individuals with income abroad is intended to amend the rules for the application of the abolition relief referred to in Article 27g of the PIT Act.

The change involves the introduction of a deduction limit for the abolition allowance up to PLN 1360. This limit corresponds to the amount of tax reduction referred to in Article 27(1a)(1) of the PIT Act, provided for for the basis for calculating the tax not exceeding PLN 8000. The abolition allowance will therefore continue to be available to all taxpayers, only the tax deduction for the relief will not exceed PLN 1360.

According to data on the settlement of income tax on individuals for 2018, tax deductions of the so-called abolition relief made 67 thousand taxpayers for a total amount of PLN 261 million. In this group, the amount of deduction for the abolition allowance exceeding PLN 1360 showed 26 thousand taxpayers, i.e. 39% of taxpayers making the deduction. This means that most taxpayers will continue to benefit from abolition relief on unchanged terms.

At the same time, I would like to stress that this amendment to the rules on the application of abolition relief has been subject to public and social consultation. Some of the comments made by social actors raised concerns about the consequences of the abolition reduction. In particular, a number of comments have been made by the marine environment.

With reference to the above, the Act introduces provisions maintaining the application of the abolition relief on the basis of the existing rules (without applying the deduction limit for this relief), to certain income from work and services rendered abroad outside the land territory of the States, as follows: "The second sentence of paragraph 2 shall not apply to income generated in a tax year outside the territory of the Republic of Poland from sources referred to in Article 12(1) and Article 13(8)(a) and (9) if that revenue is obtained from work or services rendered outside the land territory of the States." (Article 27g(5) of the PIT Act).

Consequently, the deduction limit for the relief will not apply to income from employed employment or from the provision of services under the contract of an order or work contract referred to in Article 13(8)(a) or to contracts for the management of an undertaking, management contracts or similar contracts, including revenues from such contracts concluded in the framework of non-agricultural business activities carried out by a taxable person, where such income is generated by the work or services rendered outside the territory of the States and therefore also by the income of seafarers.

This is an expression of the specific conditions for the exercise of occupations outside the land territory of the States, which have a significant impact on the living conditions of both seafarers and their families.

In the light of the above, the entry into force of the amendments to the abolition relief in question will not affect the income of seafarers from working or services rendered outside the land territory of the States, as they will be entitled to deduct the full abolition relief in accordance with the current rules.

Under the authority of the Minister of Finance, Funds and Regional Policy

Jan Sarnowski

Undersecretary of State at the Ministry of Finance

♪ signed with a qualified electronic signature ♪

If there is a reply from the Minister of Family and Social Policy, the Shipyard Portal will inform you immediately.

Source: sejm.gov.pl