The taxation of a foreigner working in Poland but having an employer/client abroad is a complex issue. Who should pay taxes and where in this situation? In Poland, foreigners earning income within the country pay income tax, regardless of their residency status. All income earned in Poland, including funds from abroad, is subject to taxation.
Legal Basis: Tax Residency
The key factor is the tax residency status, which is determined by Polish law.
Art. 3. Personal Income Tax Act. Tax Obligations
- Natural persons, if they reside in the territory of the Republic of Poland, are subject to tax on all their income (revenues) regardless of the location of the sources of income (unlimited tax liability).
- A person residing in Poland is a natural person who:
- has a center of personal or economic interests (center of vital interests) in the territory of the Republic of Poland, or
- stays in the territory of the Republic of Poland for more than 183 days in a tax year.
- 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 on income earned in the territory of the Republic of Poland (limited tax liability).
Therefore, as a Polish tax resident, a foreigner has tax obligations to Poland on all their income, including that earned abroad. If not a resident, then only on income earned in Poland.
What Taxes Does a Polish Tax Resident Pay When Working Remotely?
The main taxes a resident foreigner working remotely from Poland must pay include:
Personal Income Tax (PIT)
This is the main tax on personal income. The PIT rate in Poland is progressive and depends on the annual income amount (the tax scale). It’s crucial to note that taxable income includes all income received both in Poland and abroad.
ZUS Contributions (Social Security)
These contributions are mandatory for all tax residents in Poland. They cover pension, disability, and health insurance. The amount depends on the form of employment and income level. If working on a B2B contract (self-employment), the entrepreneur pays ZUS contributions independently.
VAT (Value Added Tax)
This tax applies if a foreigner, operating as a self-employed person (działalność gospodarcza), provides services subject to VAT. This depends on the specific activity. When providing services to a client from outside the EU, the VAT rate is often 0% (export of services), but this requires proper registration and documentation.
How to Determine Tax Residency Status?
Residency status is determined based on the aforementioned criteria: the center of vital interests or the 183-day rule. For an accurate determination, it is recommended to consult a tax advisor, as assessing the center of vital interests can be subjective.
Important Points for Foreigners
- Double Taxation: If a foreigner also pays taxes in another country, a relevant double taxation avoidance treaty (DTA) between Poland and the country of residence may apply.
- Tax Return Filing Obligation: Foreign tax residents are required to file an annual tax return (PIT-36 or PIT-37) by April 30th.
- Obtaining a Tax Number: To work and pay taxes in Poland, a foreigner must obtain an identification number, either PESEL or NIP.
Conclusion and Professional Advice
When working remotely from Poland, a foreigner who is a tax resident must clearly understand their tax obligations. It is highly recommended to seek advice from a qualified tax advisor or accountant for personalized consultation. Self-calculation can lead to errors and penalties. Knowledge of the law and timely fulfillment of tax duties are key to successful work in Poland.
If you would like more information or have any questions, please contact our managers for a prompt consultation: office@progressholding.pl
