Welcome to Poland! As you settle into this beautiful country, understanding your tax obligations is crucial. A key concept is Polish tax residency, which determines where you pay income tax. This is separate from your emigration status (residence permit). Let’s break down when a foreigner becomes a Polish tax resident.

Tax Resident vs. Expat: Know the Difference

First things first: tax residency and emigration status are not the same. You can be a Polish tax resident without being an official Polish resident (expat). Here’s the key distinction:

• Tax Residency: This dictates which country taxes your global income. As a Polish tax resident, you’d pay taxes on all your income, even from abroad.

• Emigration Status: This refers to your official residence permit in Poland. It impacts access to public services but doesn’t directly affect your tax obligations.

The Two Pillars of Polish Tax Residency

There are two main factors that determine if you’re a Polish tax resident:

1. Center of Vital Interests (CVI): This refers to where you have closer personal and economic ties. Family, permanent home, and business interests in Poland all strengthen your CVI here.
2. Physical Presence: Generally, staying in Poland for more than 183 days in a tax year (January 1st – December 31st) makes you a resident. Short absences like vacations are usually counted.

Nationality Doesn’t Matter
It’s important to note that your nationality doesn’t influence your tax residency in Poland. Anyone, regardless of their passport, can become a resident based on the CVI and physical presence criteria.

Significance of Polish Tax Residency
Understanding your Polish tax residency status is crucial because it determines where you report your global income. As a Polish tax resident, you’ll need to declare all your income earned worldwide, not just income sourced from Poland. This includes income from salaries, investments, rental properties, and any other source.

Double Taxation Treaties: Avoiding Double Trouble
The good news is that Poland has double taxation treaties with many countries. These treaties aim to prevent you from paying taxes on the same income twice. In most cases, if you’ve already paid taxes on your foreign income in another country, you may be entitled to tax credits or exemptions in Poland. However, even if the income itself isn’t taxed again in Poland, you’ll still need to report it on your Polish tax return.

Considering a Tax Advisor?
Taxation can be complex, especially when dealing with international income. If you’re unsure about your Polish tax residency status or how double taxation treaties apply to you, consulting a Polish tax advisor is highly recommended. They can help you navigate the specifics of your situation and ensure you’re compliant with Polish tax regulations.

Stay Informed, Stay Compliant
Understanding tax residency is essential for any foreigner living in Poland. By keeping these points in mind, you can be well on your way to managing your Polish tax obligations effectively.

Author:

Jerzy Gaweł
Partner – Tax Advisor