Under the Polish Deal, tax incentives were introduced to motivate taxpayers to settle in Poland and pay their taxes here.
Taxpayers who have lived and worked abroad for at least three years can take advantage of the so-called repatriation relief. This means that for four years after returning to Poland, such individuals may be exempt from paying PIT. What is important is that the said relief applies to those who resided in Poland after 31 December 2021.
What income does the relief cover?
- From full-time employment,
- From commissioned contracts,
- from non-agricultural business activity (taxed according to the scale, flat tax or lump sum on registered income),
- from maternity benefits.
- in four consecutive tax years, counting from the beginning of the year in which the taxpayer moved residence or from the beginning of the following year.
The important thing is that the exemption is up to the amount of 85,528 PLN in a tax year. The excess over this amount will be taxed under the general rules.
Who is eligible for the relief?
In addition to the circumstances indicated above, taxpayers who wish to take advantage of the repatriation relief must also meet the following requirements together:
- The taxpayer who wishes to take advantage of the repatriation relief did not have a place of residence in the Republic of Poland during the period covering:
- three calendar years immediately preceding the year in which he moved to Poland,
- the period from the beginning of the year in which he changed his place of residence in the territory of the Republic of Poland until the day preceding the day on which he changed his place of residence in the territory of Poland.
- Moreover, a taxpayer who wishes to take advantage of the repatriation relief must meet one of the following three conditions:
- have Polish citizenship, a Pole’s Card or citizenship of an EU member state other than Poland, or a member state of the EEA or the Swiss Confederation,
- reside continuously for at least 3 years in an EU member state, an EEA country, or i.a. Australia, the USA, Japan, Canada, etc.
- reside in Poland continuously for at least 5 calendar years preceding the 3-year period of residence abroad.
- Another condition is that the taxpayer must have a certificate of residency or other proof of residency for tax purposes during the period of application of the repatriation relief.
- Taxpayers who previously used the repatriation relief in whole or in part are excluded from obtaining a given benefit.
Lump sum for those moving to Poland
The foreign lump sum is a solution for taxpayers who have a high level of assets and who decide to move their tax residence to Poland.
Who can benefit?
Persons transferring their residence to the territory of the Republic of Poland can pay a fixed lump sum of 200k PLN, regardless of the size of foreign income, if they meet the following conditions together:
- by the end of January of the year following the tax year in which they transferred their residence to the territory of the Republic of Poland will submit to the tax office a statement on the choice of lump-sum taxation,
- did not have a residence in the territory of the Republic of Poland for at least five of the six tax years immediately preceding the tax year in which they transferred their residence to the territory of the Republic of Poland.
The taxpayer attaches a certificate of residency or other proof documenting previous residence outside Poland to the statement on the choice of this lump sum.
The lump sum taxation applies to foreign income that would be subject to taxation after the transfer of residence to Poland (excluding income of so-called foreign controlled companies).
Lump-sum taxation applies for a period of 10 consecutive tax years counting from the tax year in which the taxpayer moved his residence to Poland.
Expenses necessary to benefit from the lump sum
In addition to paying the lump sum, the taxpayer is required to incur expenses for economic growth, the development of science and education, the protection of cultural heritage or the promotion of physical culture in the amount of at least PLN 100,000 in the tax year starting from the tax year immediately following the tax year in which the taxpayer moved his residence to the territory of the Republic of Poland.
Lump sum on undisclosed income
The Polish Deal also introduced a tax for those who admit to hidden income. This regulation is designed to encourage taxpayers to disclose income that has been hidden from taxation at domestic or abroad. Instead, the legislator proposes to mitigate the consequences of past tax avoidance actions.
The tax will apply:
- to income (revenue) not yet disclosed,
- to undisclosed sources of their origin,
- in case of transfer or holding of capital outside the territory of the Republic of Poland,
- in the case of application of the provisions of double taxation treaties in a manner inconsistent with the context of the use of the provisions of these treaties, with their purpose and the intentions of the signatories,
- in a situation where the taxpayer demonstrates an unfactual tax residence,
- in a situation of achieving an unlawful tax advantage.
A taxpayer may apply for lump-sum taxation of income on which tax has not previously been settled correctly. When settling in a lump sum, no interest on arrears will arise. The lump sum must be paid within 30 days of the application. A fee of 1 percent of income will be charged on the application, but not less than 1k PLN and not more than 30k PLN.
In addition to the application fee, it will be necessary to pay a transitional lump sum. Its rate is 8 percent. As a rule, the tax base will be income less documented expenses directly related to its acquisition, not yet included in deductible expenses. Thus, it will be income, but earned up to the date of application for the transitional lump sum tax on income. This follows from Article 30 of the Polish Deal.
The regulations provide for the exclusion of criminal and fiscal liability of the filing entity and persons acting on its behalf, if the disclosure of this criminal act was made in connection with the filing of the application together with voluntary disclosure.