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Personal Income Tax in Poland

Figure it out!

TAX RESIDENCY

Your tax residency may shift to Poland if:

  • centre of your life interests is located here or
  • you spend in Poland more than 183 days

All aspects of your life should be analysed in view of both – the Polish tax regulations and an applicable Double Tax Treaty.

TAX RESIDENCY

Tax residency determines scope of taxation:

tax liability in Poland

limited

unlimited
TAX RESIDENCY

Limited tax liability:

  • only income sourced in Poland is taxable here
  • scope of taxation determined based on the Polish regulations and applicable Double Tax Treaty
TAX RESIDENCY

Unlimited tax liability:

  • your worldwide income is taxable in Poland
  • all sources and types of income must be taken into account
  • appropriate DTT should be applied to determine applicable method of avoidance of double taxation
TAX RESIDENCY

Certificate of residency

  • confirmation of your domicile for tax purposes
  • issued by a competent tax authority of a relevant country
  • condition for application of favourable provisions of Double Tax Treaties
REGISTRATION

Being a taxpayer – either of limited or unlimited tax liability – in many cases obligates you to:

  • register in a tax office competent for your place of stay or location of your business activity and
  • obtain a tax identification number (NIP)
METHOD OF TAXATION

Different methods of taxation apply to particular types of income. In some cases various methods are available, for example:

rental income

progressive

flat rate
tax base –
income minus costs
tax base –
gross receipt
METHOD OF TAXATION

It is important to choose a correct and most favourable method of taxation of your income. However, choice of form of activity may also be crucial, for instance choice between:

employment freelance
activity
business
activity
DEDUCTIONS AND EXEMPTIONS

There are several deductions from tax base or tax, as well as exemptions, for instance:

  • health and social security contributions
  • costs of internet
  • mortgage interest
  • children
  • donations
  • business trips
  • income from sale of property
DEDUCTIONS AND EXEMPTIONS

All deductions and exemptions are subject to conditions – you may need to plan ahead to benefit from relevant provisions, for instance:

  • sale of a property after 5 years from its purchase is not subject to taxation;
  • profit from sale of property can also be exempt from taxation if it is spent on the taxpayer’s own housing purposes within two years.
OBLIGATIONS

Taxpayers are liable for:

  • making advance payments during the year
    • monthly or quarterly
  • filing a yearly tax return and paying any outstanding tax
    • until April 30th or January 31st

unless tax is withheld by employer or contractor

TAX REVIEW

Tax settlements can be controlled by the tax authorities for over 5 years. It can result in interest and penalties; undisclosed income is subject to 75% tax rate.

Make sure your taxes have been calculated properly!

SOCIAL SECURITY STATUS

Based on the Polish regulations and the EU coordination rules one social security system to cover your insurance should be determined:

insurance

shifted to the Polish
security system

remaining under home country
security system