Finance Ministry backs down on tax tightening plans

Poland's Ministry of Finance has unexpectedly withdrawn significant portions of a draft law aimed at tightening tax regulations, a move that comes as a relief to many taxpayers. The initial proposals, designed to combat tax optimization, had sparked considerable concern among both individuals and businesses.

Mateusz Hołysz, a legal counsel and tax advisor, described the ministry's decision as a "surprising turn of events," noting that "the Ministry of Finance has removed almost the entire package of tightening changes from the project." The draft law, previously discussed in September 2025 and March 2026, included numerous provisions unfavorable to taxpayers, affecting ordinary citizens and entrepreneurs alike.

Among the most controversial elements was a proposed increase in the flat-rate tax for service providers. Under the original plan, those paying 8.5% tax might have faced a 15% rate on income exceeding 100,000 Polish złoty if they did not employ at least one full-time worker throughout the year. This change would have impacted professionals such as trainers, intermediaries, sales representatives, beauticians, and IT specialists. Additionally, the ministry had planned to increase tax burdens for flat-rate taxpayers who rent or lease their assets, whether for business or personal use, to related entities.

The proposed legislation also sought to alter the rules for entrepreneurs selling company assets, such as vehicles. Currently, it is often possible to avoid tax on such sales by transferring the asset to a family member before selling it, as gifts to close family are tax-exempt under certain conditions. The ministry intended to extend the period during which selling such an asset by a family member would trigger personal income tax obligations from six months to three years. This change would have affected vehicles, including those from leasing arrangements. Furthermore, the ministry had planned to impact companies utilizing the IP Box relief, a tax incentive for innovative businesses.

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This is a surprising turn of events. The Ministry of Finance has removed almost the entire package of tightening changes from the project.