Reporting foreign income (deadline Apr. 30th, 2021)

Living in Poland for longer than 183 days?

You may be a Polish tax resident. If that is the case, your reporting obligations also include your foreign income no matter the source. The deadline to report your income for 2020 lapses on Apr. 30th, 2021.

If you had income in previous fiscal years and you have failed to report it, do not worry it is still not too late to do so and that with almost no resulting penalties. By doing so, you will likely save yourself problems in the future. Please do not call the tax office just yet. There is a special procedure that needs to be followed in such cases.

Pay a special attention to your foreign brokerage accounts. Most people do not realize that they should inform the tax authorities about income derived here; at the same time with international tax information exchange treaties in place, despite you not reporting it, the Polish tax authorities may still receive that knowledge and sanction you. It is therefore important to include revenues from such account in your yearly tax filing in Poland. There are three major sources of income to be concerned:

  • Income from sale of stocks, ETFs, etc.;
  • Dividends;
  • Income from sale of cryptocurrencies.

Income (loss) from each transaction closing needs to be calculated separately. Income needs to be reported in Polish currency. Calculation of the amount of income is based on the official exchange rate of the Polish National Bank applicable at the day preceding any given transaction. With hundreds of transactions on your account, it may be technically challenging, but it needs to be done correctly. Good news though, you only need to report closed positions. As long you keep your position, there is no tax obligation in Poland.

The applicable tax rate is 19%, but you may be eligible to benefit from the provisions of double taxation treaties. Especially, if there was tax paid by your broker at the country of origin; and yes, losses from the previous years may be deducted from income of the current year.

Should you have any questions or concerns, please contact us, we will be glad to help.

Do not be late with your tax filing for 2020 and stay safe.

 

Author:

Jerzy Gaweł

Partner – Tax Advisor