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In essence
The purpose of our Global Mobility Services (GMS) is to provide comprehensive support to our clients in terms of compliance with the above statutory obligations in Poland.
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What can we do for you?
Our experts can guide you through PIT in Poland and employee mobility, ZUS in Poland and staff mobility, as well as other obligations related to posting employees to Poland.
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Contact us
Małgorzata Samborska
Partner, Tax Advisor
E: malgorzata.samborska@pl.gt.com
Scope of support
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Settlements during the tax year
a) Determining monthly advances towards income tax:
- Comprehensive advisory services related to payroll, taxes and social security (ZUS)
- Determining the fiscal residence of the posted employee and applying for certificates of fiscal residence;
- Analysis of the employment contract to determine the amounts payable in remuneration to the posted employee in Poland;
- Submitting the application to be assigned a tax identification number (NIP) and/or relevant updates for the posted employee and/or their spouse in Poland;
- Calculating the amounts of tax advances in a given month;
- Drawing up information for the accounting department on the amount of tax;
- Submitting all the required notifications to the National Labour Inspectorate;
b) Determining the amounts of social security contributions:
- Analysis of the facts of the case to determine whether or not the given person is subject to mandatory social security contributions;
- Registration and deregistration for ZUS, as well as reporting changes in the employee, contractor and remitter data to ZUS;
- Calculating monthly social security contributions, filling out and submitting monthly declarations;
- Processing of transfers to ZUS.
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Drawing up annual tax returns
- with respect to income from employment or contractual remuneration derived in Poland and abroad, taking into account tax credits and exemptions;
- with respect to capital gains;
- with respect to income from real estate transactions;
- with respect to joint tax returns (of spouses or single parents).
PIT in Poland and employee mobility
In Poland, tax liability can be either limited or unlimited.
Limited tax liability refers to a situation where a given person pays tax only on the income derived in Poland. The tax liability will arise under certain terms and conditions contained in the treaties for the avoidance of double taxation made between Poland and the country from which the employee is seconded. In the absence of a treaty for the avoidance of double taxation, national provisions will apply.
Treaties for the avoidance of double taxation usually stipulate the following cumulative criteria which must be met if limited tax liability is not to arise in Poland:
a) the employee is present in the other State for a period or periods not exceeding in the aggregate 183 days during a twelve-month period, beginning or ending in the given tax year, and
b) the remuneration is paid by, or on behalf of, an employer who does not have their place of residence or registered office in the other contracting State, and
c) the remuneration is not borne by a permanent establishment or a fixed place of business which the employer has in the other State.
IMPORTANT
The above means that even if just one of the above criteria is not met, limited tax liability in Poland will arise.
Regarding the criterion in a), the period of 183 days should be calculated to include all days the employee is “physically present” in Poland. It is therefore of no consequence whether the employee remains in Poland over weekends and holidays as these days count towards the 183-day threshold, too.
According to the OECD Commentary on the Articles of the Model Tax Convention:
Under this method the following days are included in the calculation: part of a day, day of arrival, day of departure and all other days spent inside the State of activity such as Saturdays and Sundays, national holidays, holidays before, during and after the activity, short breaks (training, strikes, lock-out, delays in supplies), days of sickness (unless they prevent the individual from leaving and he would have otherwise qualified for the exemption) and death or sickness in the family. However, days spent in the State of activity in transit in the course of a trip between two points outside the State of activity should be excluded from the computation.
When it comes to calculating the duration of stay in the given country, treaties for the avoidance of double taxation most commonly refer to the threshold of 183 days in any twelve-month period beginning or ending in the tax year. However, some also refer to 183 days in a calendar year, so on each occasion it is important to examine the relevant treaty for the avoidance of double taxation.
Once the 183-day threshold has been crossed, tax must be paid for the entire period the employee spends in Poland. Example: if the employee arrived in Poland in May 2019, and the period of 183 days in Poland ended in March 2020, then tax has to be paid for the period from May 2019 to March 2020, and it will also be mandatory to submit the tax return for 2019.
Regarding the criterion in b), the employer of the seconded employee must not have its registered office in Poland. Importantly, there is also a concept of the so-called “economic employer” that is used in practice. The economic employer is the entity in Poland which actually manages and directs the posted employee and pays out their remuneration. In such a case, Polish tax authorities may conclude that while the foreign entity is formally the employer, the Polish company is the economic employer. If the criterion in b) is not met, tax liability will arise from the first day of the posted employee’s stay in Poland.
The last criterion in c) refers to the payment of remuneration by a permanent establishment or a fixed place of business which the employer has in Poland. In other words, if the employee is posted to work in Poland, and their remuneration is paid by a permanent establishment or a fixed place of business, tax liability will arise from the first day of the employee’s stay in Poland.
Under national law, pursuant to article 3 para. 1a of the PIT Act: a person is regarded as having residence in the Republic of Poland if they are a natural person who:
- has their centre of personal or economic interests (centre of vital interests) in the Republic of Poland, or
- stays in the Republic of Poland for more than 183 days in a tax year.
IMPORTANT
Please note, however, that recognising someone as having residence in Poland, within the meaning of the above provision, does not make that person subject to unlimited tax liability in Poland.
ZUS in Poland and staff mobility
Irrespective of the country the person is posted to Poland from, you should always consider the issues of social security. As a matter of principle, the seconded person can only be subject to one social security system. Postings within the European Union/EEA fall under Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems (hereinafter: the Regulation). Pursuant to article 11 para. 1 of the Regulation, persons to whom the regulation applies are subject to the legislation of a single Member State only. Such legislation is determined in accordance with the provisions of the Regulation.
A person who normally pursues an activity as an employed person in two or more Member States is subject to:
1. The legislation of the Member State of residence if he/she pursues a substantial part of his/her activity in that Member State; or
2. if he/she does not pursue a substantial part of his/her activity in the Member State of residence:
- the legislation of the Member State in which the registered office or place of business of the undertaking or employer is situated if he/she is employed by one undertaking or employer; or
- the legislation of the Member State in which the registered office or place of business of the undertakings or employers is situated if he/she is employed by two or more undertakings or employers which have their registered office or place of business in only one Member State; or
- the legislation of the Member State in which the registered office or place of business of the undertaking or employer is situated other than the Member State of residence if he/she is employed by two or more undertakings or employers, which have their registered office or place of business in two Member States, one of which is the Member State of residence; or
- the legislation of the Member State of residence if he/she is employed by two or more undertakings or employers, at least two of which have their registered office or place of business in different Member States other than the Member State of residence.
To evidence the fact that the employee is covered by the given social security system, he/she should apply for the A1 certificate prior to posting to Poland.
If the employee is being posted from a country which does not belong to the European Union/EEG, you should refer to the relevant social security agreement. At present, Poland has social security agreements in force with:
- Yugoslavia (currently applies to Serbia, Bosnia and Herzegovina, Montenegro);
- Canada;
- USA;
- Australia;
- Israel;
- Turkey;
- Mongolia;
- Macedonia;
- Quebec;
- South Korea;
- Ukraine;
In the absence of a social security agreement, national provisions will apply, however it is important to note that the absence of a social security agreement does not automatically make a given person subject to the social security system in Poland.
The rates of social security contributions are as follows:
Employee:
- social insurance 9.76%
- pension insurance 1.5%
- sickness insurance 2.45%
- health insurance 9%
Employer:
- social insurance 9.76%
- pension insurance 6.50%
- work accident insurance ~1.67% (variable depending on the work performed)
- labour fund 2.45 %
Other obligations related to posting employees to Poland
Apart from the obligations related to tax and social security, employers as well as host entities are obliged to submit specific information to the National Labour Inspectorate, e.g. it is mandatory to notify posting of an employee to work in Poland.
Moreover, under the new Directive 2018/957/EU, in force as of 30 July 2020, amending the provisions on the posting of workers, the requirements with respect to remuneration and working conditions have been increased. Namely, Directive 96/71/EC amended by Directive 2018/957/EU lists the terms and conditions of employment applicable in the host Member State which are to be guaranteed to posted workers:
- maximum work periods and minimum rest periods;
- minimum paid annual leave;
- remuneration, including overtime rates;
- the conditions of hiring-out of workers, in particular the supply of workers by temporary employment undertakings;
- health, safety and hygiene at work;
- protective measures with regard to the terms and conditions of employment of pregnant women or women who have recently given birth, of children and of young people;
- equality of treatment between men and women and other provisions on non-discrimination;
- the conditions of workers’ accommodation where provided by the employer to workers away from their regular place of work;
- allowances or reimbursement of expenditure to cover travel, board and lodging expenses for workers away from home for professional reasons.
IMPORTANT
Please note that employees who are temporarily sent to work in Poland, but who do not provide services in Poland, are not regarded as posted workers. This applies for instance to employees travelling on business to attend conferences, meetings, trade fairs, training, etc.
Failure to comply with any of the obligations related to taxes, social insurance or reporting duties may incur a financial penalty imposed on the employer of the person posted to Poland.
Grant Thornton advisers have not only the relevant knowledge and experience, but also the tools to ensure an efficient service throughout the tax year and at year-end.
