Expatriate tax - Poland

Foreigners coming from the EU and non-EU countries to Poland must comply with the applicable immigration requirements under a number of legal regulations.

As a rule, in order to perform work on the territory of Poland, foreigners should ensure their stay is legal (legalized) and they have a valid work permit, unless not required in exceptional cases.

Legalisation of stay and legalization of work are usually two separate procedures in Poland, where legalization of stay in most cases is taken care of by a foreigner himself, while work permit procedures are mainly on the part of the employer employing such a foreigner.

Citizens of the EU, EEA states and Switzerland
Citizens of the European Union or European Economic Area member states, as well as Swiss citizens, are entitled to work on the territory of Poland without obtaining a work permit. If their residence in Poland is longer than three months, the EU citizens are, in principle, required to register their stay. However, there is also a certain exception to that requirement (i.e. when EU citizens enter the territory of Poland to seek employment, they may stay without having to meet the conditions of residence for a maximum of six months, unless, they can provide evidence that they are continuing to seek employment and that they have a genuine chance of being employed).

Third-country citizens
Non-EU citizens who came to Poland to work and reside in Poland legally are required to apply for a work permit and a residence permit or obtain special visa, if necessary. Work permits have various types depending on where and how the work will be performed.

Citizens of Ukraine, Russia, Belarus, Georgia, Armenia and Moldova
Citizens of Ukraine, Russia, Belarus, Georgia, Armenia and Moldova have simplified access to the Polish labour market. They may perform work in Poland without the need of obtaining a work permit, provided that they have a declaration on entrusting performance of work (submitted by an employer in the Powiatowy Urząd Pracy; valid for 24 months).

According to recent news, the Ministry of Family and Social Policy is planning to limit the above entitlement for Russian citizens (probably starting from a certain date in October – the exact date in not known yet). It is planned to remove Russia from the list of countries whose citizens can benefit from the simplified procedure i.e. perform work on the basis of a declaration on entrusting performance of work (registered by an employer a local labor office).

Work permits, if required, are usually granted for up to 3 years, however they can be prolonged.

The Polish tax year runs from 1 January to 31 December

The deadline for tax returns for all taxpayers is 30th of April following year. For example tax return for 2022 is due on 30th of April 2023. In Poland there is no possibility to extend deadline for submission of the annual tax return.

In Poland there is a basic tax free amount of 30,000 PLN (in 2022) with a progressive tax rate.

Additionally, for income exceeding 1 000 000 PLN in a year, additional tax is applied in the amount of 4% (solidarity surcharge). This is paid after the end of the year on special tax return.

Taxation in Poland depends upon residence and domicile status. Non-residents are typically taxable on Poland source income only. It can be either income from work performed on the territory of Poland or from sale of property/shares in the company located in Poland.

Residents in Poland are taxable on their worldwide income regardless of the place and type of income.

According to the national legislation a person shall be regarded as a tax resident in Poland if he/she:

1. has his/her center of personal or economic interests (center of vital interests) within the territory of the Republic of Poland; or
2. stays within the territory of the Republic of Poland longer than 183 days in a tax year.

Abovementioned conditions do not have to be met cumulatively. It is enough to meet just one of two conditions to be recognized as the Polish resident for tax purposes and consequently such person must pay taxes on world-wide income and report foreign sourced income on the tax return in Poland.

However, agreements on the avoidance of double taxation to which the Republic of Poland is a party prevail over national legislation.

Revenue from employment relationship shall mean any type of cash payments and the cash value of in-kind benefits or their equivalents irrespective of the source of financing of these payments and benefits, especially: base pay, overtime pay, supplements, bonuses, equivalents for unused statutory leave and other amounts payable irrespective of whether their amount was agreed in advance or not and cash benefits paid for an employee as well as the value of other gratuitous or partially paid benefits.

Therefore, generally everything that is paid out by the employer and is related to the work is considered as income from employment relationship.

If work is performed on the territory of Poland and conditions from national law or double tax treaty are met individuals are subject to taxation in Poland on each workday.

Mostly benefits in kind granted to expatriate are subject to taxation in Poland and are treated as income from employment. For some of the benefits, however, exemption may be granted.

Polish tax residents may benefit from tax relief granted under double tax treaties. In case double tax treaty has not been signed, credit method shall be signed under the national law. In case of credit method, the taxpayers at the end of the year can benefit from so called “abolition relief”.

Relief is intended for taxpayers of personal income tax, who decide to transfer their tax residence to the Republic of Poland.

According to the current law, a person is eligible for the relief, if he or she:

1. has moved to Poland after 31 December 2021,
2. has Polish citizenship, a Polish Charter or the citizenship of a European Union Member State or a state belonging to the European Economic Area, Swiss Confederation,
3. had had his place of residence in a European Union Member State or a state belonging to the European Economic Area, Swiss Confederation, Australia, Republic of Chile, State of Israel, Japan, Canada, United Mexican States, New Zeeland, Republic of Korea, United Kingdom of Great Britain and Northern Ireland or the United States of America for three calendar years immediately preceding the year in which he or she changed his place of residence,
4. holds a certificate of residence or other proof of residence for tax purposes during the period in which the relief is used.

Attention should be paid that the exemption applies only to the amount of income not exceeding 85,528 PLN in the tax year and does not exclude the possibility of using tax-free amount (currently 30,000 PLN per year). Relief can be used for four consecutive years.

There is wide range of deductions that may be available to Polish residents and non-residents. Primarily, expats may be entitled to benefit from relocation allowance, child tax relief, relief for return, relief for persons under 26 years old, housing allowance

Income from capital gains (e.g. sale of shares), dividends and interest is subject to taxation at a flat rate of 19%.

Liability to Polish inheritance and gift tax depends not only on the Polish location of goods and assets, but also on the Polish nationality (or Polish residence) of the beneficiary. The rates vary depending on the closeness between the donor and the beneficiary.

Income from dividends, interest, cryptocurrencies is taxed at a fixed rate of 19%.

There are local taxes but mostly not applicable to the individuals. The most important are those levied on real estate and transportation equipment.

The tax law only stipulates the maximum amounts of the taxes and the local authorities decide the actual rates. Moreover, income derived from the disposal of real estate (acquired after 31 December 2006) performed within five years from the end of the year during which it was acquired, is subject to 19% income tax rate. The taxable base is the difference between the profits from the sale and costs of acquisition of the property.

Grant of stock options may be tax-free event under Polish tax law if certain conditions are met. In any other case, grant of stock-options would be subject to taxation at a fixed rate of 19%.

Solidarity surcharge of 4% on income exceeding 1,000,000 p.a.

Whenever posting employees to the territory of Poland, employer is obliged to submit notification to National Labour Inspectorate about duration of the assignment and place where work will be performed by the employee. Non-fulfillment of this obligation can be penalised by the National Labour Inspectorate. Moreover, if the employee is obliged to pay social security contributions in Poland, employer must register in Poland and obtain tax identification number to act as a remitter.

Individuals employed by foreign entities are responsible to pay taxes to the tax authorities themselves (self-assessment). In other words, from the view of the Polish tax law employees are remitters and not the employer.

Social security contributions