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Individual Taxation in Poland

french estate poland

Individual Taxation in Poland... As a member of society, we are required to pay our taxes. Our government then uses our payment for public purposes.

Poland also makes use of taxes and runs their tax payment system monthly.

french estate poland

Tax Return Compliances

Here in Poland, individuals are required to pay 11 monthly tax advances from foreign employment relations. The annual tax returns are due on the 30th of April, and the tax year-end is on the 31st of December.

If you are not a residing Poland citizen, you will still be required to pay your taxes if you earn from a Polish-sourced income. For married couples, the taxes are still paid separately.

Poland VAT Registration

If you are a foreigner here in Poland, registering for VAT in Poland does not require an incorporating Polish to accompany you, this is what’s called a non-resident VAT trading. However, you will be limited by reclaiming Polish VATs after the registration. You must acquire a fiscal representative for your VAT registration if you are a non-resident here in Poland.

Such registrations are necessary, and you must know how to follow their strict rules in some situations. Here are common cases that require a Poland VAT registration:

  • Importing and exporting goods in Poland
  • Selling items within Poland
  • Buying a car
  • Distance selling to individuals who also live in Poland (ex. online sales).

The process for a Poland VAT registration usually takes up to three weeks. However, it can still vary (either it can be finished within 24 hours or take up until a month), depending on how you’ve fulfilled your documents.

Poland VAT Rates

Poland’s standard VAT rate is 23%. There are certain items, food, and other limited supplies of services that they have reduced about 8% and 5% of its tax rate.

There is still a lot of stuff that has a variation of its rates, even those exempt taxable supplies. You can search up to learn more about it.

Poland VAT returns

Anyone who owns a business that has a Polish VAT number is expected to submit their periodic returns. It can either be submitted monthly or quarterly. Each respective individual that has Polish tax credits must pay within 60 days (180 days for those with no taxable supplies). If you submit a tax audit, then the deadline for payment can still be extended.

Income tax

Income is categorized with the following; dependent services even from employment and pension income, professional income, business income, agricultural income, rental income, capital income etc.

For Residents

If you’re a resident that has an employment contract with a Polish-owned company, then your boss will be the one withholding the taxes at a gradual 18% tax rate and 32% on the taxable base. The mentioned rates will only be applicable if your payment is greater than the said tax brackets.

However, things are the opposite when you work in a non-Polish owned company. This is for yourself and your boss is not in any way obligated to pay your taxes. It must be paid no longer than the 20th day of the month coming following the month you receive your salary.

For married taxpayers, they’ve provided different conditions regarding joint taxation.

For Foreign Residents

Those who work in Poland but are not a resident here still follow the same rule as to what I’ve mentioned above for the residents. If you work at a Polish-owned company, then your employer will be the one handling your taxes (and vice versa).

However, it would differ for those who work on a personal service contract. In this case, you are subjected to a salary with a 20% flat rate final tax. This is paid on the 20th after your month’s pay.

Income Tax on rents

Paying your rental income tax in Poland comes with two methods: one is the flat rate method, and the other is the progressive method. Usually, this is paid monthly, but it can also be paid quarterly with the flat rate method if you only earned less than 100,000 PLN in the previous year.

If you are using the flat rate method, then you must let your local tax office know every 20th of January. Failure to do so will let them automatically believe that you will be using the progressive method. You can only go with a different method once you have finished the year.

Once you’ve started getting an income here in Poland, the local tax office must be notified about this upon the 20th of the month after you were first given your income. This is only carried out when you are using the monthly payment method, the progressive method, which does not need any notifications for your local tax office.

The tax year starts from the 1st of January and ends up till the 31st of December.

How the flat rate method works:

  1. Every 31st of January, your income tax return must be already done.
  2. This cannot withdraw charges.
  3. If your gross rental income is taxed at 8.5%, then it is considered as a separate income.

How the progressive method works:

  1. On the 30th of April, you must be done with submitting your income tax declaration or return (PIT 36) to your local tax office. This is done every year.
  2. It takes your total Polish income from gross rents, deducts costs, and other sources.
  3. If you pay 85,000 PLN per year, your tax applied rate is at 18%. Higher than the mentioned will be at a 32% tax rate.
  4. Your expenses on property tax, renovations, management fees, and depreciation will also be included. The mortgage interest has a deductible cost.

Poland’s insurance policy/The green card

What is the green card? If you are a foreigner driving your vehicle in Poland, then you must purchase a civil liability insurance policy, which is what they refer to as the “Green Card”. Poland is capable of handling these types of international system cards. With that, you can have insurance effortlessly.

Their insurance policy, the “Green Card,” can be a form of civil protection for any person out there. Take, for example, a situation wherein a third party damaged your vehicle. The insurance will guarantee that when this happens, it will not be you who pays out the damages but them instead.

Buying a vehicle in Poland

Here’s good news for you. If you are a non-resident planning on purchasing your own car here in Poland, then you are good to go since they’ve provided no restrictions when buying so.

You can buy your dream car so easily or even a used one that still serves quality, with interesting prices. You’ll just need to check its features, conditions and also provide the necessary requirements.

Once you’ve already purchased your desired vehicle, you will be getting a set of documents. These include your vehicle history card, registration document, if still valid, your insurance policy, and lastly, your car keys that usually come in two sets.

Vehicle registration

After the transaction, you’ll be given 30 days to register your car. In order to do so, you must visit the communication department at their town hall (which can also be a local council - powiat office). Make sure you’ve brought along the following:

  • The vehicle registration application form
  • ID with visa or residence card (and if possible, also your passport)
  • Vehicle contract and a VAT invoice
  • Registration document
  • License plates
  • Proof of your temporary registered address in Poland
  • Proxy forms (if there is one)

Everything must be original and is written in Polish. If your document is a different language, then you must include its certified translations.

Compulsory insurance in Poland

Making insurance in Poland is done by setting up with a local insurance company and then getting a permit from the Polish Financial Supervision Authority (PFSA). On a side note, this can be a bit costly but guaranteed that it can give you a lot of advantages.

For the foreigners who would want to get insurance in Poland, this is absolutely possible. You will need to undertake in Poland’s department on a freedom of establishment basis, or you can also try directly on the Freedom of Services (FOS) basis that Poland offers. After that, you are now allowed to do any activities in Poland.

If you are getting an insurance that will benefit you from the Freedom of Services, you’ll be able to make use of it after the PFSA gives you an answer from your home country’s supervising authority. And if you are one of those that are intending to bring out a division on the freedom of establishment basis, then in order to be of service, you must need additional information with regards to Poland’s conditions on the governing insurance.

Before disclosing all matters with the insurance, the policyholder and the one getting the insurance must make sure they have already agreed with the insurance contract process and other insurer-produced forms that can lead to the insurer’s risk. Falling out here will make the insurer lose its connections with the undisclosed circumstances and its obligations to provide you.

Want to know more about company taxation in Poland ? Click here.

Any question about living or investing in Poland ? Contact us.

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