PIT settlements: Solidarity Levy and Tax Losses

According to the current position of tax authorities and administrative courts, the tax base for the solidarity levy can be reduced by tax losses from previous years. However, it should be noted that the deduction of tax losses is only possible within the same source of income.

Solidarity Levy

The solidarity levy has been in effect for taxpayers since January 1, 2019. Individuals with annual income exceeding PLN 1 million from sources specified in the Personal Income Tax Act (PIT) are required to pay it.

The solidarity levy is applicable, among others, to the following sources of income:

• income taxed according to the tax scale, including income from employment contracts, managerial contracts, civil law contracts (mandate and specific-task contracts), serving on management and supervisory boards, intellectual property rights, pensions, and income from so-called other source,

• income from individual business activity taxed according to general rules or 19% flat tax (excluding income taxed under the lump-sum or fixed amount tax),
• income from the sale of securities, financial derivatives, shares, stakes, acquisition of shares (stocks) for non-cash contributions, redemption, repurchase, buyback, or any other form of liquidation of participation titles in capital funds, income from virtual currencies,
• Income from controlled foreign companies (CFC).

Available Deductions

The solidarity levy amounts to 4% of its calculated base, which is the excess income above PLN 1 million from the aforementioned sources of income. The tax base may be reduced by the following amounts deducted from this income:

• social security and health insurance contributions referred to in Art. 26(1) point 2 and 2a as well as Art. 30c(2) point 2 of the PIT Act,
• dividends received from a foreign controlled entity and income from the sale of shares in such an entity – to the extent included in the taxpayer’s taxable base.

The solidarity levy on income earned in 2024 must be declared (DSF-1 declaration) and paid by April 30, 2025.

Recent Doubts

Until recently, taxpayers had doubts as to whether they could include tax losses from previous years in the DSF-1 declaration. Tax authorities consistently argued that the provisions of the PIT Act regarding the solidarity levy did not allow for such a possibility. According to their position, the income subject to the solidarity levy could only be reduced by amounts explicitly stated in the PIT Act.

However, administrative courts disagreed with this approach. In their opinion, the provisions regarding the solidarity levy do not introduce separate rules for determining income from individual sources of income. Therefore, general rules should apply, meaning taxpayers can reduce the tax base by tax losses incurred in previous years, in accordance with the provisions of the PIT Act.

This position was confirmed, among others, by the Supreme Administrative Court in its judgment of November 5, 2024 (case No. II FSK 157/22) and the Ministry of Finance in its response of July 27, 2023, to Parliamentary Interpellation No. 42274.

Established Case Law

Currently, tax authorities adopt a position consistent with the previous case law of administrative courts. The Director of the National Tax Information indicates that the provisions regarding the solidarity levy do not introduce separate rules for determining income from different sources of income. This means that when calculating the tax base, the general regulations of the PIT Act should be applied, including those concerning the settlement of tax losses (Art. 9(3) of the PIT Act).

At the same time, the provisions of the PIT Act limit the ability to deduct tax losses from previous years exclusively to income obtained from the same source, which was included in the calculation of the solidarity levy for the given period.

Taxpayers, when analyzing their obligation to pay the solidarity levy and determining its amount, should consider tax losses incurred in previous years. Individuals who previously paid the solidarity levy without accounting for tax losses may consider amending their settlements. If you have any questions, please feel free to contact us.

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Legal Basis:

Art. 30h, Art. 9(3) of the Personal Income Tax Act (Journal of Laws 2025, item 163).

Judgments:

Judgment of the Supreme Administrative Court of November 5, 2024, case No. II FSK 157/22.