+44 203 621 9930What do you need to know about finance and tax in Poland before you relocate? Income tax, corporate tax, social security and VAT – how do they apply to you?
If Poland is a possible relocation destination, there is plenty you will need to find out before you move.
Whilst securing a job and finding a place to live is probably at the top of the list there is more you need to consider. A finance budget is particularly important.
Not only do you need to think about how much the rent and bills will cost you but you also need to know about finance and tax in Poland. How much of your wages are you likely to see for example? This will vary from country to country and for many can make a huge difference to their circumstances.
Whilst you may be used to paying tax and social security at a certain level in your current country it could vary greatly in the next. Factoring in how much tax you will pay along with your national insurance contributions should be a huge part of your budgeting.
We take a look in closer detail at the finance and tax in Poland and how it might affect you.
Tax obligations when moving to a new country
If you are going to be employed and know your salary already then it should be fairly straight forward to work out your stoppages.
You need to work out your income tax rate and social security contributions under the finance and tax in Poland regulations. This will give you a rough idea of your take home pay.
Your employer will inform the Polish authorities of your employment and pay your tax and social security contributions direct from your salary. It is always worth double checking that this has been done though. If you are self-employed, then you will be responsible for all of this yourself.
There is plenty of information available online, if you are unsure of how tax and social security or corporate tax and VAT affect you. If you need further help, you should hire the services of a professional. Getting professional advice will ensure that you do everything right and start your new life on the right foot.
You don’t want to get a year into your stay and realise you have omitted to fill out the right forms.
Leaving your current country will also mean there is some admin to complete. You will need to inform the tax office of your decision to leave for a start.
If you have been employed, there should be a form to give to your new employer.
If you have been paying tax and are leaving part way though the tax period, you may be entitled to a refund.
Make sure you leave a forwarding address in case there is any correspondence sent.
It is important to tie up all the loose ends.
File your tax returns and make sure you have paid any monies owed. You never know if you will want to return one day, so you need to make sure everything is in order.
Income tax rates in Poland
The income tax rate in Poland is progressive. This means that as your earnings increase so does the rate of tax that you pay.
in Poland, there are only two taxes
Unlike many countries where there are 3-5 different tax levels, in Poland, there are only two taxes.
The basic rate is 18%, and this applies to earnings of between PLN 3,091 and PLN 85,528. The next rate for earnings over PLN 85,528 is 32%.
For the self-employed, it is a bit different. You can either choose to pay the progressive rates or pay a flat rate of 19%. Now whilst this will mean that you know how much tax you will pay it does mean you don’t get any of the benefits that come with the progressive rate.
It is important that you register as self-employed and keep accurate records. You will need to submit a tax return after each tax year as well.
Social security in Poland
The Constitution of Poland states that everyone has the right to social security if they are unable to work, find work or are retired.
The social security system includes a state pension, illness benefits, accident and unemployment and more. To be part of the scheme (which is compulsory if employed) then the employee makes contributions totaling 13.71% of their gross salary. This is done by the employer who also contributes.
For the self-employed voluntary contributions must be made.
Corporate tax in Poland
The corporate tax rate in Poland is 19%. This has been the same rate since 2004 having previously been as high as 40%.
Corporate tax is due on income earned in Poland, but there are two different circumstances.
- If the office or the management board of the company is based in Poland, then you pay corporate on all worldwide income in Poland.
- If the management board or offices are not based in Poland, then you only pay corporate tax on Polish incomes.
VAT in Poland
The rate of VAT in Poland is 23%. This is the standard rate. There are reduced rates of 8% and 5% which apply to certain foodstuffs and other products and services.
There is then a VAT exemption on some financial services and postal services.
The VAT threshold registration for businesses is PLN 200,000. This rate was recently raised having previously been set at PLN 150,000.
VAT returns must be submitted monthly or quarterly. This will depend on the turnover.
Other Polish Taxes
In addition to the common income tax, social security and businesses tax what other taxes can you expect from finance and tax in Poland? Well to begin with you need to be aware of the local taxes. This mainly applies to real estate, transportation and dogs amongst others.
Inheritance and donation tax was abolished in 2007.
There is also stamp duty on the property to consider.
First of all, you need to ensure you know which taxes apply to you. You must also make sure you fill out the correct forms and complete the correct registration procedures. If you are in any doubt at all, it is wise to seek professional advice.
If there is a language barrier make sure you are dealing with someone that can translate for you. The forms and processes can be complicated enough without having to try and understand them in an unknown language.
The more you can do before you move, the less you will have to worry about when you arrive in your new home.