UpWork is a popular marketplace among many freelancers, including Polish ones. If you are moving or have already moved to Poland, you may find this article to be helpful.
Here in Poland you can start using UpWork without any problems. There are obviously no limitations imposed by the local law, so you shouldn’t worry about that.
If you want to work through UpWork in Poland you don’t need any additional work permits to do so. You won’t face any fines or criminal/civil prosecution for working without a permit.
If you want to withdraw the earned money, you can do so either by:
- withdrawing it directly to your personal bank account or by
- using PayPal services.
However, please remember that if you come from a country where the use of PayPal is limited, you can be asked to provide additional proof that you are currently residing in Poland, before you can fully enjoy the functionality of PP.
How to report income from Upwork
Let’s imagine that you are currently working for a Polish company and you would like to find additional work on UpWork.
That’s completely legal, however bear in mind that you would have to pay taxes in accordance with the applicable Law.
There are 2 criteria, which determine tax residence:
- person, who has the so called “centre of vital interests” in Poland;
- resides in Poland for more than 183 days within a tax year.
Assuming that you are working for a Polish company, you can satisfy either of those requirements, however only one is enough. Being a Polish tax resident means that you should account for the Polish tax authorities of all your income.
If you’re thinking about hiding your income from the Polish government, it is not advisable, as you may be subjected to criminal prosecution.
Here we should mention, that Polish personal income tax system is progressive and currently provides for 2 tax rates (18/32%), deepening on whether your yearly earned income exceeded the threshold (app. PLN 85,000).
Bear in mind, that when submitting your annual tax form, you’re supposed to choose the PIT-36, not PIT-37. Based on the calculations, you will either get a tax refund or you’ll have to pay extra money.
Choose the PIT-37 form if you received your salary from a Polish employer and do not have any extra income, for instance from UpWork or any other sources.
So, if you worked for the same employer, throughout the tax year, you would have to fill in the PIT-37 form. But if you are reading this article, this is clearly not the case.
However, if in addition to receiving your income from a Polish employer, you also received some additional revenue from UpWork, you should use the PIT-36 form, where you specify all the additional income you got.
The PIT-36 form is usually used by people, who provide services as sole-traders (działalność gospodarcza), however freelancers can use it as well.
Bear in mind that in both cases, if you worked for a polish company, the employer will provide you with the PIT-11 form, which is basically an overview of obtained income and advance payments of income tax.
He also submits this form to the Tax Office. The question whether you should choose either PIT-36, or PIT-37, depends solely on the type of income you earned during the year.
Now you have to calculate how much money you earned on UpWork and what sort of services you provided for your clients through the platform.
It may be: royalty income, income from the activities performed personally, the so called “income received from other sources”.
The majority of polish freelancers usually specify their freelancer income as “income from the activities performed personally” — działalność wykonywana osobiście.
However when you choose royalty income — Przychód z praw autorskich, you can deduct allowable expenses by applying the 50% rate of tax deductible costs.
As of January 2019, is the annual limit related to the use of the said 50% tax deductible costs is PLN 85,528.
Long story short: unfortunately there is no easy way to do so.
Each case should be viewed and analysed individually, so that the proper tax rate could be applied. Should you need any help with your annual tex returns, we recommend turn to an accountant.