Taxation in Poland: What Foreigners Need to Know
The issue of taxation in the country where we decide to settle for a long time or start a business is one of the key factors to consider. Taxes in Poland are diverse, and the calculation system is quite complex, so we have prepared a guide to the main ones.
In Poland, the authority responsible for tax collection and management is the Ministry of Finance (Ministerstwo Finansów). It develops tax policies, collects taxes and duties, monitors compliance with tax obligations, and conducts audits and investigations into tax crimes. Additionally, the Ministry of Finance is responsible for drafting and amending tax laws in Poland. It also provides consultations and training for entrepreneurs and individuals on taxation matters.
Below, you will find information about the types of taxes levied in Poland, as well as the specifics of tax payments for foreigners.
Do Foreigners Have to Pay Taxes in Poland?
A foreigner who earns income in Poland is, in most cases, required to pay taxes in this country. Generally, individuals who are not Polish citizens but reside in Poland for more than 183 days within a calendar year are considered permanent residents and must pay taxes on all their income, both earned in Poland and abroad. Additionally, foreigners who conduct business activities in Poland may also be required to pay taxes in this country. This rule also applies to students.
A Ukrainian working in Poland can be classified as:
A tax resident – in this case, they must pay taxes on all their income, including income earned outside Poland.
A tax non-resident – in this case, they only need to pay taxes on income earned within Poland.
A person qualifies as a tax resident if they:
Have a center of economic interests in Poland (e.g., a permanent source of income, a business) or personal commitments (such as a spouse, children, or a home).
Reside in Poland for more than 183 days per year (approximately 6 months).
A citizen of Ukraine with Polish tax residency status is taxed under the same conditions as a Polish citizen. Income earned outside Poland is also considered in Poland. Annual declarations must be submitted to the tax office at the place of residence.
- Income Tax in Poland – PIT
- Corporate Income Tax – CIT
- Dividend Tax
- VAT in Poland and Salary Tax Refund
- Agricultural Tax
- Inheritance and Donation Tax
- Fees for Civil and Legal Acts
- Stamp Duty
- Transport Tax
- Property Tax
- Excise Tax
- Gambling and Gaming Tax
- Tonage and Forest Tax
- Local Taxes
- Tax Benefits in Poland
- Taxes in Poland for Entrepreneurs
Income Tax in Poland – PIT
Income tax (PIT) is a tax levied on the income of individuals for the tax year, including earnings from salaries, pensions, and other sources of income. Income tax is the primary source of funding for public services and social programs, and its payment is mandatory for all taxpayers earning income within Poland. The income tax rate is 12% of profit + 9% (health insurance contribution) up to 120,000 PLN in annual income, but if you exceed this amount, for example, by earning 130,000 PLN, you will pay 32% + 9% (health insurance contribution) on the amount exceeding 120,000 PLN (in this example, 10,000 PLN).
Corporate Income Tax – CIT
CIT (Corporate Income Tax) is a tax on the income of companies, such as corporations and other business entities. The tax rate is determined based on the profits earned. In Poland, the corporate tax rate (podatek dochodowy od osób prawnych) is 9% for small and medium-sized businesses (with an annual turnover of up to 2 million euros) and 19% for larger business entities (with turnover exceeding 2 million euros).
When calculating the tax, the company’s income is determined as the difference between total income and expenses for the tax period. Additionally, companies have the right to deduct certain expenses, such as salaries, rent, insurance, and other costs related to business operations.
The tax period in Poland typically corresponds to the calendar year, but companies can choose a different period that better suits the nature of their business.
Poland also has a double taxation system, which involves taxing income earned in other countries. To avoid double taxation, Poland has signed more than 90 agreements with various countries to eliminate double taxation.
Furthermore, Poland offers various tax benefits and subsidies for investors operating in the country. For example, there are special economic zones where tax rates for companies registered in the zone can be significantly reduced. Entrepreneurs can also receive benefits when investing in certain industries or creating new jobs.
Dividend Tax
Dividend tax (podatek od dywidendy) is levied on individuals receiving income in the form of dividends from Polish companies and amounts to 19% of the received profit. However, the tax rate may be reduced to 5% or completely waived if the recipient of the dividends is a resident of a country with which Poland has a valid tax treaty.
VAT in Poland and Salary Tax Refund
VAT (Value Added Tax) in Poland is a tax on the value added to goods and services within the country. The standard VAT rate in Poland is 23%, but there are also other rates, such as 8% and 5%. Some goods and services may be exempt from VAT or taxed at a zero rate.
It is also worth mentioning the salary tax refund (zwrot podatku) available to foreign workers working temporarily in Poland. To receive a tax refund, conditions such as having a visa, work permit, and registration in Poland must be met.
To apply for a salary tax refund, you must contact the tax office (Urząd Skarbowy) and provide the necessary documents, such as a passport copy, proof of foreign worker status, and proof of tax payment.
The tax refund may amount to up to 18% of the income tax (PIT) withheld from the salary. It is important to note that receiving a salary tax refund may take some time and require specific efforts, including submitting an application and providing relevant documents.
Agricultural Tax
Agricultural tax (podatek rolny) is levied on land used for agricultural purposes, including fields, gardens, vineyards, and vegetable plots, etc. This tax is paid by landowners and tenants who have the right to use the land for agricultural activities. The amount of agricultural tax in Poland depends on the area of the land and the method of cultivation. There are several tax rates that may vary depending on the region of the country. The basic agricultural tax is calculated by municipalities based on the price per quintal of rye provided by the Central Statistical Office. It is 2.5 times the price of 1 quintal of rye. Thus, the basic rate of agricultural tax in 2023 will be 185.12 PLN per hectare of cultivable land. For small plots of land, up to 1 hectare, the agricultural tax may not apply, while for larger plots, it may amount to several thousand PLN per year depending on the region.
Landowners in Poland may also receive benefits and subsidies if they use their land for certain purposes, such as ecological farming, growing specific types of crops, etc.
Inheritance and Donation Tax
Poland has an inheritance and donation tax (podatek od spadków i darowizn), which applies to both Polish citizens and foreigners. The rate of inheritance and donation tax in Poland depends on the degree of relationship between the donor/testator and the recipient. If the recipient is a close relative, such as a parent, spouse, child, or grandchild, the tax rate will be lower than if the recipient is a distant relative or another person.
According to Polish law, the inheritance and donation tax must be paid once, within 6 months from the opening of the inheritance or receipt of the donation. If the tax is not paid on time, penalties and interest are charged for each day of delay.
If the inheritance or donation is of a small amount, if the property is donated to charity, or if the recipient is disabled, the inheritance tax may be reduced or even completely waived. The non-taxable amount is as follows:
- 9,637 PLN – for close relatives (first tax group).
- 7,276 PLN – for relatives (second tax group);
- 4,902 PLN – for individuals who are not relatives (third tax group).
Fees for Civil and Legal Acts
When registering assets such as real estate or vehicles in Poland, a state fee is levied, which is typically a percentage of the asset’s value. A fee may also apply when registering a marriage, divorce, or changing a name.
Notarial acts, such as wills, gifts, or property sales agreements, may also incur fees that vary depending on the value of the transaction and other factors.
Stamp Duty
Stamp duty (taksa skarbowa) in Poland is a state fee imposed on certain legal and civil acts, such as registering a new company, amending its articles of association, issuing certain permits and licenses, etc. The amount of this fee varies. For example, when registering a company, the stamp duty depends on the company’s share capital and can range from a few hundred to several thousand zlotys. For foreign individuals applying for a temporary residence permit in Poland, the stamp duty is 340 PLN.
Transport Tax
Transport tax (podatek od środków transportowych) is levied on owners of cars, motorcycles, and other vehicles, with the amount depending on several factors, including the make and model of the vehicle, its age, type, and engine capacity. For trucks weighing between 3.5 and 12 tons, the following rates apply:
- Trucks from 3.5 to 5.5 tons – 1,020.16 PLN;
- From 5.6 to 9 tons – 1,701.84 PLN;
- From 9 to 12 tons – 2,042.19 PLN;
- Over 12 tons – 3,897.01 PLN.
Property Tax
Property tax (podatek od nieruchomości) in Poland is a local tax imposed on property owners for the use of their property. The amount of this tax depends on the municipality in which the property is located, as well as its size and value. Property value is the key criterion for determining the tax and is assessed every five years by an appraisal committee appointed by the municipality. The property tax rate can also vary based on the property’s use, such as residential or commercial. For example, in 2023, taxpayers will pay up to 1.16 PLN per square meter for land related to business activities. For other land, the rate will be 0.61 PLN. This lower rate also applies to land under apartment buildings.
The tax must be paid annually, with the payment deadline varying by municipality. Typically, property tax in Poland is paid twice a year – the first payment is due in March, and the second in September.
Various exemptions and discounts on property tax are available for certain taxpayers, such as disabled individuals, pensioners, and low-income families.
Excise Tax
Excise tax (podatek akcyzowy) in Poland is levied on certain goods, including alcoholic beverages, tobacco products, fuel, and energy. The goal of this tax is to increase government revenue and regulate the consumption of these goods.
The tax on alcoholic beverages in Poland depends on the volume and strength of the drink. For example, the tax on beer is 0.95 PLN per liter, wine is 3.3 PLN per liter, and spirits are 35 PLN per liter.
The tax on tobacco products also depends on the type and quantity of the product. For example, the tax on cigarettes is 1.8 PLN per piece, and the tax on cigars is 0.55 PLN per gram of tobacco.
The tax on fuel and energy depends on the type of substance. For instance, the tax on gasoline is 1.1 PLN per liter, on diesel is 1.45 PLN per liter, and on gas is 0.42 PLN per cubic meter.
Gambling and Gaming Tax
Poland’s tax system for gambling and gaming includes a tax on games and a tax on winnings. The gaming tax applies to operators of slot machines, casinos, betting agencies, and other organizations offering gambling services. The tax rate on games is 12% of the income earned by these entities.
The tax on winnings, with a rate of 10%, applies to players who win monetary prizes in gambling games. There are some exceptions; for instance, winnings in lotteries and competitions organized by state organizations are not subject to taxation.
Tonage and Forest Tax
Poland has several taxes related to the forestry industry, one of which is the forest tax (podatek leśny). It is levied on forest owners and is intended to preserve forests and mitigate the environmental impact of forestry activities. The tax rate depends on the area of the forest and ranges from 0.02 to 2 PLN per hectare per year.
There is also the tonnage tax (podatek od środków transportowych) levied on vehicles, including trucks, used for transporting wood. The amount depends on the weight of the vehicle and ranges from 0.2 to 3 PLN per ton of cargo.
Local Taxes
Local taxes in Poland were introduced by the Local Taxes and Fees Act of April 1, 1985, and remain a source of income for local governments. Tax rates are determined by municipalities but cannot exceed the limits set by lawmakers.
Common local taxes in Poland include:
- Podatek od nieruchomości – levied on property owners for using their property.
- Podatek od pojazdów – levied on owners of cars and other vehicles.
- Opłata za korzystanie ze środowiska – levied on businesses using water resources for production.
- Podatek od posiadania urządzeń reklamowych – levied on owners of billboards and other advertising installations.
- Podatek od sprzedaży – levied on businesses selling goods and services within the municipality.
- Podatek od posiadania psów – levied on dog owners.
Local taxes in Poland are calculated by municipalities, and they may differ between cities and regions. Local taxes are typically paid annually, though deadlines may vary by municipality. Certain categories of taxpayers, such as disabled individuals or low-income families, may be eligible for exemptions or discounts on local taxes.
Tax Benefits in Poland
Poland offers several tax benefits for entrepreneurs and individuals:
- Exemption from tax obligations, such as tax deductions for investment in real estate.
- Tax credits for financing business projects.
- Conditional tax rates to attract investment and promote development.
The most popular types of tax benefits for foreigners in Poland are:
Tax benefit for internet payments (up to 760 PLN per year);
Tax benefit for families with children under 18 years old (up to 25 years old if the child is studying at a higher education institution);
Tax benefit for thermal modernization of housing (up to 106,000 PLN);
Tax benefit for blood donation (no more than 6% of a person’s income per year);
Tax benefit for charitable activities (also no more than 6% of annual income);
Tax benefit for families with 4 or more underage children, etc.
What are the consequences for tax evasion in Poland?
In Poland, tax evasion can lead to serious consequences, including fines and even criminal proceedings.
Fines can be imposed for late tax payments or failure to pay taxes, and they can reach 200% of the unpaid tax amount. Financial penalties are also imposed on those who fail to submit tax returns on time or provide false information in them.
In cases of tax fraud or intentional misuse of tax benefits, criminal proceedings may be initiated against the offender.
If you live in Poland, remember that the tax system can change, so you should study this issue annually to understand which aspects of tax legislation apply to you personally.
How to calculate taxes on salary in Poland?
We provide a link to an online calculator, Pracuj.pl. You can calculate the amount you will have to pay to the state.
Follow these steps on the website:
Enter your desired salary (e.g., 10,000 PLN).
Choose the type of contract — Umowa zlecenie.
The system will calculate the fees you need to pay.
Important tab for entrepreneurs: Koszty pracodawcy (Employer’s Costs), which you need to review carefully. For an employee with a salary of 10,000 PLN, the employer will pay 12,061 PLN in tax load.
Taxes in Poland for Entrepreneurs
These are quite substantial amounts, and they can be discouraging for business owners. However, there are other advantages to doing business in Poland, which you can read about here.
What accountants don’t do
Accountants do not calculate options and do not offer optimal solutions. We have not found any accounting firms providing such services. An exception is a tax consultant in Poland, which is what we do. We are not financiers, but we know how the system works and can help you save a good amount of money. Alternatively, you must understand accounting and make decisions on how to optimize your tax burden.
This is not about illegal accounting, writing off expenses, or exchanging invoices with others. Everything is legal. It is about common sense within the legal framework.
When to pay taxes in Poland
A legal entity pays taxes monthly or quarterly, and at the end of the year, it submits an annual report. An individual pays part monthly and part in the annual PIT declaration.
If you have any questions or would like further assistance with doing business in Poland, feel free to contact us, and we will help you navigate the process.
