Tax return season is here! Some of us have already done it, others wait until last minute….

Today I wanted to tell you a little more about taxes in Poland, since the system is slightly different than in USA.

An individual pays tax on his income as a wage earner or as a self-employed person. The tax for an individual who meets the criteria of a “permanent resident” in Poland will be calculated on his income in Poland and abroad. A foreign resident who is employed in Poland pays tax only on his income earned in Poland.

An individual is a Polish resident if the center of life is in Poland , or if staying in Poland more than 183 days in a fiscal year. An employer is obligated to deduct, immediately on a monthly basis, the tax payable on an employee’s salary. A self-employed person must prepay income tax that will be offset on filing an annual return. The advance payment is determined on the basis of the return made for the previous year. In the event of a new business, the advance will be calculated on the basis of estimates made by the owner of the business.

Poland Individual income tax rates 2011:

Tax Base (PLN) Tax %

1 -85,528 18%

85,528 and over 32% of base exceeding PLN 85,528

Poland Capital Gains

In general, there is no special tax rate for capital gains in Poland. Capital gains are usually added to the regular income of an individual/company and based on the normal tax rates.

Despite this, if real estate is sold by an individual more than 5 years after it was purchased the capital gain is exempt from tax. Sale within 5 years from the date of purchase is taxed at 19%.

Individual’s capital gain from sale of shares is taxed at a final tax rate of 19%.

In Poland dividend and interest income for individuals is taxed at 19% rate.

Reporting Dates & Payment Dates in Poland

The tax year in Poland is the calendar year ending on December 31.

An Individual -An individual whose income is from a salary only is not obliged to file an annual return.

The employer who deducts income tax from the employee transfers the tax to the tax authorities each month.

An individual who is self-employed is obliged to make 11 monthly advance payments.

Each advance must be made by the 20th day of any month for the previous month (in December, an advance is paid for both November and December).

The date for filing the annual return is April 30.

A Company -Payment of advances on tax is similar in the case of a limited company to that of the individual.

The company is obliged to file an estimated return to the tax authorities by March 31, and to pay the difference in the tax.

The latest date for filing an annual return is September 30 (for the previous year).

Poland Corporate Tax

Poland’s corporate tax for the year 2011 is 19%.

A company is a Polish resident if registered in Poland, or managing its activities in Poland.

I moved out of Poland while still in school, so I’m not sure how smoothly the whole process of filing tax returns is…

Maybe someone can share it with us?

Do następnego razu… (Till next time…)