Since the early 1990s, the Polish tax system has been gradually reformed with the intention of encouraging investment in Poland and so creating workplaces. Tax system reforms have been supported by the process of adapting and harmonising Polish law with the Europenian Union law.

Personal Income Tax (PIT)

In general terms, a natural person residing in Poland (usually it means a stay of at least 183 days of the calendar year) is a taxpayer in Poland and is liable on their globally-earned income regardless of the place where remuneration is received. In the case of temporary residence, only the income coming from the Polish sources, irrespective of where it is received, is subject to taxation in Poland. The detailed regulation is included in International Agreements for the Avoidance of Double Taxation signed by Poland with over 80 countries. It is recommended to search for the agreement by a country of origin as it is available in the native language version. The Polish version is available on the Ministry of Finance web page.

Tax payments

According to the Polish law, an employer, regardless of the type of a work contract or fellowship, is obliged to calculate and make advancement of monthly tax payments for income earned by a physical person due to employment or service relationship. In general terms, the gross remuneration is subject to the following obligatory labour cost charges (some of them are shared between the employer and employee): healthcare, disease, accident charges, and disability and old-age pensions.

Taxes in 2009

Depending on the type of contract the individual personal income can be a subject to one of the following forms of taxation:

1. by general terms (normal employment contract) - the taxpayer pays a tax on the actual income earned in accordance with the progressive tax scale which includes four income thresholds:

• up to 85.528 PLN - 18% of revenue
• above 85.528 PLN - 14.839,02 PLN + 32% of the amount up to 85.528PLN

2. by lump sum - in the case of other forms of employment 19% of revenue is taxed

Value Added Tax (VAT)

Polish tax provisions also provide for some exemptions from VAT. Among the activities subject to such exemptions are financial, educational, health and cultural services. However, the exemption excludes the deduction of input VAT related to the exempt transactions.

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