Remote working and taxation of foreigners' income in Poland

Remote working and taxation of foreigners’ income in Poland

What is the taxation in Poland if one works remotely?  This question is often asked by foreigners who come to Poland to work. The question relates to remote work and the taxation of income when working for a company located abroad. It mainly concerns freelancers or companies operating in the IT sector. Let us look at an example.

We have an IT company in Ukraine and their employees moved to Poland after 24 February and continue to work as a Ukrainian company providing services to companies in the EU and other countries. The company also pays taxes in Ukraine. How to pay taxes on income received from a foreign contractor (client or employer) remotely?

In order to answer your question, one should refer to the Personal Income Tax Act:

Art.3 Personal Income Tax Act. Tax obligations

(1) Natural persons, if they have their place of residence in the territory of the Republic of Poland, are subject to taxation on their entire income (profits) regardless of the place of location of the sources of income (unlimited tax liability).

1 а. A natural person who:

• has a centre of personal or economic interest (centre of vital interests) in the territory of the Republic of Poland, or
• resides in the territory of the Republic of Poland for more than 183 days in a tax year.

2а. Natural persons, if they do not have a place of residence in the territory of the Republic of Poland, are subject to tax liability only with respect to income earned in the territory of the Republic of Poland (limited tax liability).

Therefore, a foreigner earning income, regardless of whether he/she has a permanent place of residence in Poland (tax resident) or whether he/she stays in the country temporarily, is obliged to pay tax on income earned on the territory of the Republic of Poland. In our example, the place of work will be the place where the individual performing the work for which he or she receives remuneration is located. This is also how the Polish tax authorities treat this issue.

For working Ukrainians, staying in Poland for more than 183 days means that, in this case, they acquire the status of a tax resident, so they must pay income tax on the remuneration received, as the regulations do not take into account the reason for staying in the territory of the Republic of Poland, even if it is forced and related to military activities.

If you have any further questions, please write to office@progressholding.pl.