If you work in Poland, it’s important to understand the taxes you need to pay and how to file a tax return. In this article, we will explain the Polish tax system, main tax rates, exemptions, and how to complete and submit an income tax return, as well as which benefits and deductions may apply.
Who Is Considered a Tax Resident of Poland?
According to Polish law, an individual is considered a tax resident of Poland if they satisfy at least one of the following conditions:
- They have a center of personal or economic interests (center of vital interests) in Poland. This means that the resident's family lives in Poland, or they have active business activities, real estate, property, or other significant interests here.
- They reside in Poland for more than 183 days in a tax year. These days do not have to be consecutive; all dates, even partial days, are counted.
A tax resident of Poland is obligated to pay taxes on all of their income, regardless of where it was earned. This is known as unlimited tax liability. However, if an international agreement on the prevention of double taxation exists between Poland and another country, it can prevent double taxation on the same income.
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Income Tax (PIT)
Income tax (PIT) in Poland is a tax paid by individuals on income earned during the tax year. Income up to PLN 30,000 per year is tax-free; income up to PLN 120,000 per year is taxed at a rate of 12%, and income over PLN 120,000 is taxed at a rate of 32%. These rates apply to all officially employed individuals, regardless of the type of contract. People under the age of 26, as well as women over 60 and men over 65, are exempt from paying income tax if their annual income does not exceed PLN 85,528.
Additionally, several tax benefits are available:
- Child Benefit: PLN 1,112.04 per year for the first and second child, PLN 2,000.04 per year for the third child, and PLN 2,700.00 per year for the fourth and each subsequent child.
- Internet Benefit: PLN 760 per year.
- Benefit for Social Contributions: Covers the amount of expenses actually incurred.
- Relief for Donations: Covers the actual amount of the donation, up to a maximum of 6% of income/profit.
All available tax exemptions and the conditions for obtaining them can be found at podatki.gov.pl or at the tax office in your place of residence.
Social Security Contributions in ZUS
Social security contributions to ZUS in Poland are paid by employers, employees, and entrepreneurs operating in Poland. These payments ensure the right to receive various types of benefits and pensions in cases of illness, disability, unemployment, old age, and other situations.
ZUS benefits include the following types of insurance:
- Pension Insurance (ubezpieczenie emerytalne) provides the right to receive an old-age or disability pension.
- Disability Insurance (ubezpieczenie rentowe) provides the right to receive disability or death benefits.
- Accident Insurance (ubezpieczenie wypadkowe) provides the right to receive benefits for temporary incapacity for work, permanent incapacity for work, or death resulting from a work-related accident or occupational disease.
- Sickness Insurance (ubezpieczenie chorobowe) provides the right to receive benefits for temporary disability, care for a sick family member, maternity benefits, and childcare.
- Health Insurance (ubezpieczenie zdrowotne) provides the right to receive medical care under the National Health Fund (NFZ).
- Labor Fund and Solidarity Fund (fundusz pracy i fundusz solidarnościowy) contributions that finance measures to promote employment, vocational training, unemployment benefits, and other social initiatives.
The calculation base for determining the amount of ZUS payments is the employee's monthly income, reduced by tax deductions. However, the base cannot be lower than the minimum wage in Poland.
Some contributions are covered solely by the employer or the employee, while others are shared between them at a certain percentage.
The obligation to contribute depends on the type of employment contract under which a person is employed:
- Employment Contract (umowa o pracę) – Provides for the payment of all contributions.
- Contract of Assignment (umowa zlecenie) – Sickness insurance is voluntary and can be waived, and accident insurance applies only when working on the employer’s premises.
- Specific Work Contract (umowa o dzieło) – Social security contributions are not compulsory, but they can be paid voluntarily. It is also possible to pay for only the required types of insurance.
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Timing and Methods of Paying Taxes
A PIT return is a document in which a taxpayer reports their income and expenses for the tax year and calculates the amount of income tax to pay or receive as a refund. For most employees who earn income from an employment or civil law contract, a PIT-37 return is appropriate.
To complete and file a PIT-37 return, you will need a PIT-11 form, which is a statement of income and taxes paid, issued by an employer or client. It contains information about the employee's annual income, advance tax payments, and Social Security and Medicare contributions.
The employer must file the PIT-11 with the tax office by the end of January and provide the document to the employee by the end of February. If there were multiple places of employment, a PIT-11 form must be received from each employer.
The PIT-37 declaration can be completed and submitted as follows:
- Online – through the Twój e-PIT service or other platforms (e-pity, e-deklaracje, PITax.pl).
- Manually – in paper or electronic form.
Twój e-PIT is an official service where you can review the declaration prepared by the tax office and submit it online. You can also make necessary changes, file the declaration jointly with your spouse or as a single parent, and indicate any applicable tax benefits. If you do not review the return by April 30, it will be automatically considered verified.
If completing the return manually, you can file it in person at your local tax office or by mailing it as registered mail with a return receipt.
If you are entitled to a tax refund, you can receive it via postal order or to your specified bank account within 2-3 months. If there is an underpayment, it must be paid within 7 days by bank transfer, postal order, or in cash at the tax office. Delays in filing the PIT-37 return or paying the tax may result in penalties and interest. The payment status can be checked on the tax office’s website, by calling, or visiting in person.
FAQ – Frequently Asked Questions
What is the taxation system in Poland?
Poland has a progressive taxation system, which means that the tax rate increases as income rises.
How much VAT is in Poland?
In Poland, the standard Value Added Tax (VAT) rate is 23%. Additionally, there are reduced rates of 8% and 5% for specific goods and services. A preferential 0% rate applies to certain transactions, such as exports and intra-community supplies.
How much salary is tax free in Poland?
In Poland, the tax-free income threshold is set at PLN 30,000 per year. This means that individuals earning up to this amount are exempt from paying personal income tax (PIT).
What taxes do I have to pay when working in Poland?
You must pay personal income tax (PIT) at a rate of 12% (for income up to 120,000 PLN per year) or 32% (for income over 120,000 PLN per year). In addition, you must pay social contributions to ZUS, which include contributions for pension, health insurance, and unemployment insurance.
How to file an income tax return in Poland?
An income tax declaration in Poland can be filed online or in paper form at the tax authority in your place of residence. The deadline for filing the declaration is April 30 following the reporting year.
Will child tax credits be automatically taken into account?
Yes, child tax credits are automatically calculated. However, ensure the data on your return is correct, as errors may exist in the automatically prepared data.
