Taxation of international executives
All additional tax information is summarized by KPMG Tax M Michna Sp. K.., the Polish member firm affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity, based on the Social Security System Act of 13 October 1998 (with amendments), Personal Income Tax Act of 26 July 1991 (with amendments). Inheritance and Gift Tax Act of 28 July 1983 (with amendments).
Are there social security/social insurance taxes in Poland? If so, what are the rates for employers and employees?
The Polish social security system consists of three pillars, to which payments are made. The first and second are obligatory; the third is not. Contributions are split between the employee and the employer. Generally, social security applies to income derived under a Polish employment contract and/or Polish service contracts, business activities, and so on, depending on the given situation. As a rule, it does not apply to foreign-sourced income, unless EU regulations are applicable.
In the case of local payroll remuneration, currently the social security contributions are made by both the employer and employee; however, in the case of the employee’s contributions, it is the employer who makes the actual payment to the social security authorities (ZUS). Also to be noted is that employer makes payments toward the Labor Fund and also the Employee’s Guaranteed Benefits Fund (Fundusz Gwarantowanych Swiadczen Pracowniczych), which are calculated on the individual’s grossed-up salary.
The table below provides an overview of the current types of contribution and applicable rates.
|Type of insurance||Paid by employer||Paid by employee||Total|
|Bridging Pension Fund (FEP)||0.00% or 1.50%||0.00% or 1.50%|
|Accident Fund**||0.67% - 3.33%||0.00%||0.67% - 3.33%|
|Employees' Guaranteed Benefits Fund||0.10%||0.00%||0.10%|
|Total (up to limit)||19.48% - 22.14%||13.71%||33.19% - 35.85%|
|Total (past limit)||3.22% - 5.88%||2.45%||5.67% - 8.3%|
* Once an individual’s gross remuneration exceeds 30 average estimated national salaries for a given year (PLN142,950 for 2019) contributions toward these funds cease.
** Accident fund contributions are calculated based on the number of individuals registered for accident insurance and the activity of the payer specified under the employer’s statistical REGON number (according to the Polish Classification of Business Activities-PKD). The level of accident fund is determined through the decision of social security authorities.
All compensation left over after the social security contributions have been deducted is subject to taxation in the standard manner.
Mandatory health insurance contributions are also payable by the employee at 9 percent of income, however, 7.75 percent is deductible from tax as a credit, so in practice the net cost to the individual is 1.25 percent.
Specific EU regulations apply to EU citizens working in Poland (and Polish assignees working abroad in EU states).
The Community provisions on social security do not implement one uniform social security system in the form of a single European system for all EU member countries/territories.
Each EU member country/territory may retain its own domestic social security system and design different regulations. The Community provisions on social security have, however, general legal force and apply directly in all Member States and are binding upon everyone to whom they are applied and have to be observed by national authorities and administrations, social security institutions, and courts. Even in cases where provisions of national law are in conflict with Community rules, the latter have priority.
Generally, a person who has exercised their right to move within the Union may not be placed in a worse position than a person who has always resided and worked in one single Member State. In order to avoid a situation where migrant workers are either insured twice or not at all, the Community provisions on social security, determine which national legislation applies to a migrant worker in each particular case.
Individuals working in Poland, who are EU Member State nationals, should be affected by the EU social security regulations in the field of social security, which became effective in Poland following EU accession. Depending on the individual circumstances of each assignee, they may be subject to social security in their home country/territory, the country/territory of their employment, or the country/territory where work is actually performed. Each case should be investigated carefully to determine appropriate social security contribution payment requirements and obligations.
Are there any gift, wealth, estate, and/or inheritance taxes in Poland?
Inheritance and donation tax are payable on the acquisition of immovable and movable property located within the country/territory and property rights subject to execution in and outside Poland. However, in the case of movables, this does not apply when the donor and recipient are not Polish citizens and do not have a permanent residence in Poland at the time the donation is made.
At present, there are no wealth taxes imposed in Poland.
Are there real estate taxes in Poland?
As a rule, individuals who possess real estate as owners, freeholders of the property or perpetual usufructuaries of land are obliged to pay real estate tax. The total amount of the tax is determined by commune council with the consideration of maximal real estate tax rates established in appropriate provisions.
Are there sales and/or value-added taxes in Poland?
Value-added tax exists in Poland. The basic rate is 23 percent. There are also actions which are subject to lower 8 percent, 5 percent, or 0 percent tax rates and actions exempt from value-added tax.
Are there unemployment taxes in Poland?
Currently, there are no unemployment taxes in Poland.
Are there additional taxes in Poland that may be relevant to the general assignee? For example, customs tax, excise tax, stamp tax, and so on.
The solidarity levy (starting from 2019) is introduced by the Act on the Solidarity Fund for Persons with Disabilities.
The aforementioned provisions introduce into the PIT Act a new tax in payable at a rate of 4 percent on the surplus of total income above PLN1,000,000 obtained in the tax year, to which the taxation rules set out in Article 27, Article 30b, Article 30c and Article 30f of the PIT Act apply, reduced by the amount of social security contributions and the amounts referred to in Article 30f section 5 of the PIT Act (i.e. amounts reducing the taxable base for the income of a controlled foreign company).
The income referred to above includes income taxed according to the progressive tax scale (rates of 18 and 32 percent), e.g. from employment contracts, civil law contracts, business activities (including those subject to the 19 percent tax rate) and income from capital gains (e.g. from the sale of securities or shares).
Income to which the new levy applies does not include income subject to flat-rate tax (e.g. interest and dividend income).
The taxpayer will be obliged to pay the solidarity levy by 30 April of the year following the tax year. What is important to note, is that the taxpayer will also be obliged to submit an additional declaration on the amount of the solidarity levy for the tax year.
Taxation of unrealized capital gains (exit tax)
In case of individuals, the exit tax is imposed on change of a taxpayer’s tax residence if, as a consequence, Poland lose (wholly or in part) the right to levy tax on income derived from the sale of an asset owned by the taxpayer as a result of the change of the country/territory of residence (for natural persons) or the registered seat or the place of effective management (for legal entities) to another country/territory.
In the case of natural persons, also the assets which are not related with business activity shall be subject to taxation (e.g. shares in companies) – this regulation concerning personal property shall be applied only if a taxpayer has been a Polish tax resident for at least 5 years within a 10 year period before the change of the tax residence.
The exit tax basis shall be calculated as the surplus of the market value of the transferred asset, determined at the date of the transfer, over its tax value (as defined in the Act).
The tax rate shall amount to:
In the case of natural persons, only the transfer of assets with a market value exceeding PLN4 million shall be subject to taxation (calculated in relation to an individual transaction or for several transactions conducted during a period of 1 year).
Taxpayers will be obliged to submit tax returns and report the amount of income subject to exit tax until the seventh day of the month following the month in which the income arose. At this point taxpayers shall also be obliged to pay the tax.
There are generally no local taxes levied on expatriates with respect of their remuneration subject to Polish tax.
Is there a requirement to declare/report offshore assets (e.g., foreign financial accounts, securities) to the country/territory’s fiscal or banking authorities?
As a rule no, but the tax office may require access this information on demand during the inspection.
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