Polish Tax Laws and Regulations
Polish Tax Laws
Dealing with tax, payroll, and employment regulations for your staff from overseas is always a tricky process and poses complications that demand expert guidance. Poland is no exception, with layers of taxation applying both at individual and corporate levels, including advance payments and, in the case of personal taxes, a complicated credits system.
Overview of Taxes in Poland
* Poland is a member of the European Union, but not the Eurozone and uses the zloty (PLN) as its unit of currency.
Residents’ Personal Income Tax (PIT): The rate up to PLN 120,000 (€26,549, US$30,273) is 17%. Excess is taxed at 32%, plus a payment of PLN 14,539 (€3,204, US$3,673). Taxed on worldwide income. There is a tax-free allowance of PLN 30,000 (€6,636, US$7,566). Income up to PLN 85,528 (€18,854, US$21,592) earned by persons under 26 years old is tax free, since August 2019
Non-residents’ Personal Income Tax (PIT): Certain categories of income are taxed at a flat rate of 20%. Otherwise taxed at normal rates on income sourced in Poland.
Social Insurance Taxes: Employees contribute a total of 13.71% to pension, disability, and sickness insurance from gross salary. Employers contribute a total of 20.38% of the employees’ gross salary towards pensions, disability and accident insurance, the employee guaranteed benefits fund and the Labor Fund. As of January 2022, the 7.75% contribution to health insurance is no longer tax deductible.
Corporate Income Tax (CIT): The standard rate is 19% on taxable profits, with returns and final payment completed three months after the tax year. Monthly CIT advance payments are made by the 20th of the following month. A rate of 9% applies to companies with revenue up to PLN 5,451,970 (€1,200,000, US$1,374,877). The lower rate can apply in some circumstances to start-ups launched since 2019. Proposed CIT changes include providing computerised accounts (not until January 2023), changes on transfer of assets outside Poland and a new tax of 0.4% on large corporations.
Withholding Tax (WHT): The domestic rate for dividends is 19%, with 20% withheld on interest and royalties paid to non-resident companies or individuals. Lower rates may apply below a threshold of PLN 2,000,000 (€442,540, US$504,877) paid to single recipients in a tax year.
Value Added Tax (VAT): The standard rate is 23% applied to goods and services. A reduced rate of 8% applies to such as pharmaceutical products and transport services; 5% to books, journals, and some foodstuffs, for example. Changes proposed from July 2022 affect tax groups, some financial transactions, and refunds to businesses.
Poland Individual Tax – Single, Married
Liability for personal income tax is based on residency. Individuals whose personal and economic base is in Poland and who reside there for more than 183 days in a tax year are residents and are taxed on their worldwide income. Those who are not based in Poland and do not reside there for more than 183 days are non-residents and taxed only on Polish-sourced income. Married couples can file joint returns in certain circumstances.