PIT filing for foreigners
The deadline for submitting PIT returns by natural persons, including foreigners earning income in Poland, is fast approaching. The tax filing rules for expatriates depend on numerous factors, including tax residence, type of income earned, and double taxation treaties. Please find below a list of selected issues that you should pay attention to when preparing your PIT return.
Tax residence
One fundamental issue that needs to be resolved before preparing the PIT return is the notion of tax residence. A person who is a Polish tax resident (has their residence address for tax purposes here) is subject to unlimited tax liability in Poland. This means that such a person will be obligated to pay tax on the entirety of their income, including that earned abroad, in Poland. On the other hand, income earned by non-residents is subject to limited tax liability in Poland. As a general rule, non-residents pay tax in Poland only on income earned on Polish territory, e.g., on income derived from:
- employment relationship, if the work is performed in the territory of Poland,
- activities performed personally in the territory of Poland,
- business activity carried out in the territory of Poland,
- real property located in the territory of Poland.
According to the PIT Act, a tax resident is a person who meets one of the following conditions:
- has their center of vital interests in Poland or
- stays in Poland for over 183 days in a tax year.
At the same time, if a person is simultaneously considered a tax resident of another country (due to the fulfillment of the conditions for obtaining the status of a resident provided for by the laws of that country), tax residence should be determined on the basis of the conflict of laws principles contained in the relevant double taxation treaty. As of today, Poland has concluded double taxation treaties with approximately 90 countries, including EU member states and selected Asian countries.
PIT return
Several other aspects should also be analyzed when preparing the PIT return. In particular, attention should be paid to:
- the conditions allowing spouses to file their returns jointly,
- the conditions allowing single parents and their children to file their returns jointly,
- the possibility of applying increased tax-deductible costs in the case of, e.g., copyright transfers,
- the rules for deducting social security contributions paid abroad,
- the possibility of taking advantage of tax reliefs/deductions.
In our experience, the PIT filing process for expatriates often gives rise to many doubts and uncertainties, which eventually require the involvement of a qualified expert to be cleared up. Therefore, should you require additional information or support in that regard, please do not hesitate to contact our office at: office@tias.pl
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