Taxes for Individuals in Poland

Taxes in Poland are mandatory payments to the state treasury. Individuals pay taxes upon receiving income. This applies not only to Polish citizens but also to foreigners earning income in Poland.

Who Is a Tax Resident in Poland?

The status of a tax resident in Poland is crucial for determining tax obligations.
A tax resident in Poland is an individual or legal entity subject to taxation in Poland based on residency status. Tax residency in Poland is defined by several key criteria established by Polish tax law:

• Permanent residence: An individual is considered a tax resident if they have a permanent residence in Poland, such as an apartment or house used as their primary home.
• Center of life interests: If an individual does not have a permanent residence but their “center of life interests” (e.g., family, work, social ties) is in Poland, they may still be classified as a tax resident.
• Presence in Poland: An individual is considered a tax resident if they spend more than 183 days per year in Poland.

Taxation Rules for Residents

• Polish tax residents are taxed on their worldwide income (i.e., income earned both in Poland and abroad).
• Non-residents are taxed only on income from sources in Poland.

It is essential to determine your status correctly, as it may affect the application of international agreements to avoid double taxation. Consulting tax professionals is recommended when necessary.

Personal Income Tax in Poland

In Poland, personal income tax (PIT, or Podatek dochodowy od osób fizycznych) is regulated by the Personal Income Tax Act. It applies to income earned by both residents and non-residents.

Income Tax Rates

• Up to PLN 30,000: Tax-free.
• Between PLN 30,000 and PLN 120,000 (gross): 12% of the taxable amount.
• Over PLN 120,000 (gross): 32%.

Taxable Income Sources

• Wages and other payments from employers.
• Income from business activities.
• Rental income.
• Capital gains (e.g., dividends, interest).

Deductions and Tax Reliefs

• Child tax credits (ulga na dzieci).
• Medical expense deductions.
• Charitable donations.

Income Tax Declarations

Individuals must file an annual income tax return (PIT) by the end of April of the year following the tax year. Declarations can be submitted in paper or electronically.

• Residents earning income within Poland typically use form PIT-37 for employment income.
• Foreign income requires form PIT-36.

Social Security Contributions in Poland for Individuals

In Poland, individuals employed under labor contracts or engaged in business activities must pay social security contributions. These contributions fund various social programs, including pensions, healthcare, and accident insurance. The Social Insurance Institution (ZUS – Zakład Ubezpieczeń Społecznych) manages these payments.

Key Social Security Contributions and Rates

1. Pension Contributions (ZUS – Zakład Ubezpieczeń Społecznych):
   • Pension insurance (emerytalne): 19.52% of gross salary (shared equally between employee and employer).
   • Disability insurance (rentowe): 8% of gross salary (1.5% paid by the employee and 6.5% by the employer).
2. Healthcare Contributions:
   • 9% of gross income, with 7.75% deductible from income tax.
3. Accident Insurance Contributions:
   • The rate varies from 0.67% to 3.33%, depending on occupational risk levels.

Rates for 2024

• Pension insurance: 19.52% (9.76% employee, 9.76% employer).
• Disability insurance: 8% (1.5% employee, 6.5% employer).
• Healthcare insurance: 9%.

For employees, the total contributions amount to approximately 13.76% of gross salary (excluding accident insurance).

Minimum and Maximum Contribution Bases

• Minimum Base: In 2024, the minimum base for contributions is approximately PLN 3,600, subject to changes in the minimum wage.
• Maximum Base for Pension Contributions: Limited to three times the average wage.

For further questions, contact us at office@progressholding.pl.