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Every natural person, who receives income in Poland is subject to Personal Income Tax. As a rule, a foreigner is deemed to be tax resident and is subject to PIT, if he/she either:
- resides in Poland for more than 183 days in a tax year or
- has his/her centre of vital interests in Poland.
It is enough to satisfy either of those conditions to become a Polish Tax resident. Tax residents are subject to PIT on all the income they receive, subject to double-tax treaties.
Limited taxation applies to natural persons, who are not Polish tax residents. Non-tax residents are taxed on their income from Polish sources.
Usually the PIT is calculated, using the progressive scale. However the Personal Income Tax Act provides certain exceptions.
For instance, under certain conditions individuals, who provide business activities in Poland can be subject to PIT, using the so called flat rate — 19%.
The same 19% flat rate applies to income, obtained from interest and capital gains.
When it comes to using the progressive scale, there are currently two rates: 18% and 32%.
- Annual income is lower than PLN 85,528 — 18% minus tax-free allowance (the so-called tax free amount);
- Annual income is higher than PLN 85,528 — 15,395.04 + 32% of surplus over PLN 85.528 minus tax-free allowance.
Tax rates for young people
In 2019 the Polish government announced the launch of the so-called “Zero PIT programme” aimed at young people under 26 years of age.
The new amendments to the PIT Act entered into force on the 1st of August 2019, thus scrapping the personal income tax for young employees earning less than PLN 85,528 (€20,000) a year.
In accordance with the new regulations, young employees, under 26 years old (including foreigners), who earn money under e.g.:
- contracts of employment (umowa o pracę) or
- civil law contracts (such as umowa zlecenie).
are eligible for the 0% Personal Income Tax rate.
However, the special tax exemption rules do not apply to taxpayers whose annual revenue exceeds the threshold of PLN 85,528 (€20,000), as well as to those young employees and entrepreneurs, who earn income:
- under task-specific civil law contracts (such as umowa o dzieło);
- by providing services as a sole trader (działalność gospodarcza);
Polish taxpayers are obliged to submit the annual tax return to the Tax Office (US — Urząd Skarbowy) no later than on April the 30th. The annual tax form (usually PIT-37) can be submitted either electronically or on paper.
Be advised: you should pay attention to deadlines, failure to submit or late submission of the said Tax Return form can result in a fine.
If you are employed by a Polish company, you will receive your PIT-11 form from the employer, no later than by the end of February. PIT-11 is a Polish form that contains basic information on income, earnings, and taxes paid.
Personal Income Tax is usually paid in monthly advance installments, i.e. PIT advance payments are deducted from the wage employees receive each month.
However sometimes, the taxpayer will have to make up the difference, if the monthly advance payments did not fully cover the tax due. For example, if the taxpayer exceeded the threshold of PLN 85,528.
The annual liability is a difference between the taxpayer’s tax due, specified in the annual PIT-37 form and the said advance payments, the Tax office collected during the fiscal year.
It should be noted, that in Poland each taxpayer is eligible to a number of tax reliefs and deductions:
- tax deductions and exceptions for families;
- child benefit;
- charitable contributions;
- internet expenses, and others;
Tax evasion is illegal and is punishable by a fine or imprisonment in accordance with the applicable provisions of Polish Law.
In Poland general issues of tax law are regulated by the Tax Ordinance Act of the 29th of August 1997 (Dziennik Ustaw [Journal of Laws]. of 2005, No. 8, item 60 as amended).
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