OkI is to be a taxation ‘present’ for investors, but its rules are far little apparent than suggested by the slogan of PLN 100 1000 without the taxation of Belka. Not all asset will benefit from full exemption, and in any cases a fresh account may prove little profitable than a regular brokerage account. We're looking at precisely how the OKI will work, who's gonna get the most out of it, and where the most crucial traps are hiding.
Where did Belka's taxation come from?
Capital gains taxation was introduced in 2002 by Leszek Miller's government, and his face became then finance minister Marek Belka. Hence the common name that stuck to him for over 2 decades.
Initially it only included interest on bank deposits and was to be a temporary solution. The state needed money to patch up the budget hole, and taxing the savings of Poles was the easiest way to find this money quickly. The rate was set at 20%.
Marek Belka was Deputy Prime Minister and Minister of Finance in Leszek Miller's government from 2001 to 2002, Prime Minister from 2004 to 2005, and president of NBP from 2010 to 2016. Source: PAP
A year later, in 2004, the taxation was extended to income from stock investments and investment funds. The rate was then reduced to 19% and remained at this level until today. The temporary solution was so permanent, which in Polish taxation practice is simply a regulation alternatively than an exception.
Over the years, different ideas have emerged to modify it. Introduction ]]>IKE and IKZE]]>, that is, pension accounts with waiver from Belka under certain conditions. Politicians of various options promised to abolish it completely, but the promises never went concrete. OKI is the first real change in the way Polish investments are taxed in many years. However, it is not a full exemption, but alternatively a relief with limits and circumstantial conditions, which will be discussed in a moment.
The current taxation mechanics is simple. It takes 19% of all profit from the investment. If you place a deposit on 10 000 PLN and after a year the bank will add 400 PLN interest to your account, only 324 PLN, due to the fact that 76 PLN will take the tax. The same is actual of the sale of shares. You buy assets for 10 000 PLN, sale them for 12,000 PLN and from a profit of 2 000 PLN you give back 380 PLN to the country. The same rule applies to dividends. The company pays you PLN 1,000, but the brokerage account accounts for PLN 810 due to the fact that 190 PLN taxation has been deducted.
How will the OKI work?
OKI, or ]]>Personal Investment Account]]>, is simply a fresh kind of account intended to invest your own savings. 1 place can be held, among another things, shares, bonds, units of funds or deposits, and in return the State offers preferential taxation rules. The account structure is based on 2 limits and a fresh tribute that replaces the classical Belka tax.
The first limit is PLN 100 thousand. To specified a full asset value (which qualify in accepted standards, which you will read about in a moment) Your investments in the OKI are full exempt. Profits, dividends and interest are not taxed at all as long as you are within this threshold.
The second limit concerns alleged savings assets, i.e. bank deposits in gold and ]]>retail bonds of the kind TOS, COI or EDO]]>. The exemption works here only up to PLN 25 thousand. Above this threshold besides keep these funds in the OKI, but this part of the assets is already falling under a fresh tribute. Importantly, limits cannot be combined in any way. The full amount of the preference may not exceed PLN 100 thousand.
OKI Action Diagram Source: own development
So how will the fresh taxation be calculated?
The key difference with Belka present is that the fresh OKI taxation is counted on the value of assets above the limit, alternatively than on the profit earned. It doesn't substance if the wallet grew, fell, or stood still. The fiscal strategy itself is curious in excess capital above the statutory threshold.
In 2027, or in the first year of the OKI, this will be a rigid 0.85%. The pattern has been changing since 2028. The rate then is 19% multiplied by the NBP mention rate of 31 October of the erstwhile year, but not little than 0.1%. For example, with a 3.75% foot, it's about 0.71%. At 5%, it's 0.95%. The mechanics has this feature that in periods of advanced rates the taxation is higher, and at low rates it approaches the statutory minimum.
One item is worth paying attention to. The Act introduces the lower threshold of the rate, but does not supply for the advanced limit. The investor environment, among another things the Individual Investors Association, demanded a maximum rate of 1%, but this proposal was not accepted. As of 2010, the highest possible taxation was 1.28% and amounted to 2023, which was associated with pocovid inflation.
Continue reading: ]]>OKI – how much will you truly gain from your individual investment account?]]>
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Author: ]]>Bartosz Beerko]]>
