How to account for rental income for 2025?

This is because the legislator gave taxpayers the option to choose how to tax their rental agreements – when filing their 2022 PIT return in 2023, they could either settle it under the general rules (using the tax scale) or as a lump-sum tax on recorded income. This year, that choice no longer exists and, as a result, landlords are unable to tax rental income according to the tax scale. Income from this source must be settled as a lump sum on recorded income. How is private rental income taxed in Poland from 2023? What are the rates for this lump sum? What tax return must be filed to correctly account for rental income?

Rental agreement and the 2023 flat-rate tax on rental income

The tenancy agreement is regulated by Articles 659–692 of the Civil Code. Pursuant to Article 10(1)(6) of the PIT Act, one of the sources of income for a natural person that is subject to PIT is income derived from a tenancy agreement. However, pursuant to Article 2(1a) of the Act on Flat-Rate Income Tax on Certain Income Earned by Natural Persons, natural persons earning income from, amongst other things, a lease agreement pay a flat-rate tax on recorded income.

Article 12(1)(4) of the Act on Flat-Rate Tax provides that a flat-rate tax of 8.5% will apply to income not exceeding PLN 100,000, whilst a tax of 12.5% will be payable on the excess amount. It is worth noting that the 2023 flat-rate tax on rental income applies to revenue, not profit. This means that the taxpayer loses the ability to deduct tax-deductible costs – tax is paid on the entire revenue received without deducting the costs of obtaining it. So what is the situation regarding rental income and utility charges in 2023? If the flat owner, as the landlord, is obliged to pay administrative fees, rent or utility charges, they cannot deduct these from the amount of income.

Flat-rate tax on recorded income

Pursuant to Article 21(1) of the Flat-Rate Tax Act, the flat-rate tax must be paid for each month by the 20th day of the following month (for income earned in December, the flat-rate tax must be paid by 20 January of the following tax year). The taxpayer may also choose to pay the lump sum quarterly rather than monthly (this is permitted under Article 21(1a) of the Lump Sum Tax Act). Income from letting must also be declared in the PIT-28 tax return. The taxpayer is not required to keep a record of income. It is sufficient for them to hold a property rental agreement. The PIT return for 2023 may be submitted from 15 February to 30 April 2024.

It is also worth noting that concealing (failing to declare) profits from letting exposes the landlord to tax liability and criminal tax liability. Such liability may result in an obligation to pay outstanding tax together with interest, and the taxpayer may face criminal liability for an offence under Article 54 of the Criminal Tax Code.

The rules described above apply exclusively to the settlement of private lettings for 2023 – for lettings as part of business activities in 2023, the entrepreneur may continue to settle their tax using the tax scale, a flat-rate scheme or a flat tax. It is worth bearing these rules in mind when settling your PIT for 2023.

If you are interested in issues such as the flat-rate tax on rental income for 2023, rental income as part of business activities in 2023, or the settlement of rental income for 2023, or if you have any queries regarding these matters, please contact HWW Hewelt Wojnowski Lindner i Wspólnicy.