INDIVIDUAL TAXES
SIGNIFICANT DEVELOPMENTS
Following the reform of the social security system, contributions are now borne by both the employer and the employee.
TERRITORIALITY AND RESIDENCE
An individual who is a resident of Poland or whose temporary stay in Poland is longer than 183 days in a given tax year is liable to tax on worldwide income, irrespective of the origin of the income. A nonresident who stays is Poland for less than 184 days in a given tax year is liable to tax only on income from work performed in the territory of Poland on the basis of a service agreement or an employment contract, irrespective
of the place of payment or of other income arising in the territory of Poland.
Irrespective of the length of stay in Poland, a nonresident individual who has arrived in Poland for a temporary stay in order to take employment in a foreign small business enterprise, a company with foreign participation, or a branch or representative office of a foreign company or bank is
liable to tax only on income from work performed in the territory of Poland on the basis of a service agreement or an employment contract, irrespective of where this is paid, and other income arising in the territory of Poland.
GROSS INCOME
Employee gross income/Employee gross income includes basic pay, overtime pay, supplemental pay, awards and bonuses, compensation for unused holiday or vacation time, all other monetary amounts, and benefits-in-kind, as well as all other services obtained without payment.
Income from each source is defined as the surplus generated in a tax year of revenue over the costs of obtaining that revenue. If, in a given tax year, losses from any source of income (with a few exceptions) exceed the taxpayer's total income from all sources, the taxpayer has the right to carry forward each source's loss by deducting this loss in three equal parts over the next three years from income derived from the same source.
For individuals liable to Polish tax only on Polish-source income, earnings from some sources are taxed at a flat rate of 20% unless a bilateral tax treaty between Poland and the individual's country of residence states otherwise. These types of earnings are the following.
1. Earnings from copyrights and other intellectual property rights such as trademarks, patents and designs, including proceeds of sale.
2. Income from the transfer of technology.
3. Income received from another party for the use of industrial, commercial or scientific equipment.
4. Income received from another party for information and expertise in the fields of industry, commerce or science.
5. Income from work in the fields of art, literature, science, education, journalism, and athletic activities, including income from participation in artistic, scientific and cultural competitions (independent work).
6. Income from work commissioned by national or local government authorities or administrative bodies or by the courts or the prosecutor's office (in particular, that of expert witnesses in all types of legal and administrative proceedings) and income received as a fee for participation
in commissions established by local government bodies.
7. Income received as fees for membership on boards of directors, supervisory boards, committees, and other decision-making bodies of legal entities.
8. Income from rendering personal services on the basis of a specific work contract or self-employment contract concluded with a legal entity, an entity without legal personality or a business, as long as these services are not business services offered by the individual contractor to the public.
Capital gains and investment income/Income from the sale of real property is separately at the rate of 10% if the sale is not carried out within the scope of regular economic activity and occurs within from the end of the tax year in which the purchase of the property took place or, if a special tax relief was claimed, the sale occurs within ten years.
Income from the sale of objects (i.e., chattels) is taxed in the same way if the sale occurs within six months from the date of acquisition of the object.
Certain capital income is exempt from tax, including interest on savings deposits and demand accounts (except from bank accounts operated for business purposes) and interest on State Treasury bonds. Income from the sale of State Treasury bonds, stock of quoted companies and shares of companies formed to lease privatized property is exempt from income tax.
Interest income from the granting of a loan is taxed at 20%, except where the granting of loans is the object of regular economic activity.
Dividends joint stock companies and shares in profits of limited liability companies are distributed from the net after-tax profit of a company.
Dividends and these shares, as well as undis
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