Natural persons who are either domiciled in Poland or stay in the country longer than 183 days in the course of a calendar year are subject to Polish fiscal regulations regarding their personal income, irrespective of its source (unlimited tax liability).

Natural persons who stay in Poland for periods of less than 183 days, as well as those -even if their stay is longer -who temporarily live in Poland and work in companies with foreign capital participation, or branches and other representative offices of companies and banks, pay personal income tax only on their income originating in Poland (limited tax liability.)

Persons subject to unlimited tax liability are taxed on virtually all sources of income.

Persons subject to limited tax liability pay taxes only on income earned in Poland. In the case of remuneration, this also includes income earned in respect of employment in Poland but physically paid abroad.

The income tax liabilities of persons not domiciled in Poland may be modified by an applicable double taxation treaty. (Appendix F contains a list of countries with which Poland has signed such agreements).

Taxes are calculated on the basis of cash and in-kind earnings.

Income earned by way of an employment contract is understood as earnings due and payable in a fiscal year, cash or otherwise, as well as all costs and in-kind obligations borne by the employer on behalf of the employee.

The following sources of income are exempted from personal taxation:
  • insurance receipts (personal and property);
  • interest on deposits and current accounts;
  • reimbursement for moving expenses when changing jobs (up to 200% of the remuneration due for the month in which an employee was transferred);
  • per diem allowances and other reimbursed expenses; payments for the use of personal cars by company employees, up to a certain limit;
  • payments for the lease of accommodation when employees work outside the place where they are usually resident;
  • income earned abroad & if international or bilateral agreements so provide.

Taxable income may be decreased by certain donations made, up to the value of a set percentage of pretax income before donations, compulsory social security expenditures (currently these are covered by the employer), and housing investments within specified limits. This percentage is 10% for donations made to charitable scientific, technical, educational and cultural bodies and 15% for donations made to charitable religious, environmental and military defence bodies.


Taxes are levied on total income (with the exception of income earned from dividends, interest on loans and proceeds from real-estate sales), according to the following schedule:

Taxable income                 Tax payable              zlotys

up to 12,400 
  (124,000,000 old zlotys)     21% minus 165.60 
                               (1,656,600 old zlotys)

12,400-24,800                  2,438.40 (24,384,000 old zlotys)
(124,000,000-248,000,000       +33% over 12,400
old zlotys) 

over 24,800                    6,530.40 (65,304,000 old zlotys)
  (248,000,000 old zlotys)     45% over 24,800   

The above tax rate brackets are applicable both for limited and unlimited tax liability.

Income earned by expatriates for work in Poland funded by certain inter- national financial institutions and by foreign governments on the basis of bilateral agreements is exempted from tax.

Income from dividends from Polish companies and interest on loans is taxed at a fixed rate of 20% and is not added to earnings from other sources. This rule also applies to earnings from the sale of real estate and legal rights related to housing and land -in these cases the fixed tax rate is 10% of the sale price.

Should income taxed abroad be eligible for a tax exemption in Poland under a double taxation treaty, it is added to taxable income earned in Poland in order to calculate the tax rate bracket applicable to other taxable income. If, according to the provisions of such treaties, the income taxed abroad is not exempt from taxation in Poland, the tax paid abroad decreases the tax to be paid in Poland. This decrease is proportionally limited to the amount of tax due for foreign taxable earnings.

Subject to the provisions of double taxation treaties, which may provide otherwise, persons paying limited taxes, in the case of income from individual activities, functions in supervisory bodies, boards of directors, royalties, patent rights, copyrights, and know-how, are subject to a fixed 20% tax rate irrespective of their income level. In this case, however, no costs are deductible against the income.

Employers are obliged to withhold advance payments of their employees' monthly remuneration and account for it to the tax authorities. The amount of advance payments depends on the employees' remuneration obtained from the beginning of the year from a given employer.

The advance payments for personal income tax are calculated in the following way:

  • for months from the beginning of the year to the month (inclusive) in which the remuneration of an employee obtained from a given employer does not exceed 12,400 zlotys (124,000,000 old zlotys), the advance payment is calculated at the rate of 21%;
  • for months following the month in which the remuneration of an employee obtained from the beginning of the year from a given employer exceeds 12,400 zlotys (124,000,000 old zlotys), the rate of advance payment is 33%;
  • for months following the month in which the remuneration of an employee obtained from the beginning of the year from a given employer exceeds 24,800 zlotys (248,000,000 old zlotys), the rate of advance payment is 45%.

This amount of advance payment is decreased by 31 zlotys (310,000 old zlotys) monthly if the employee submits a declaration that he complies with specific requirements.

In the following year, the employer must, by the end of February, calculate the total tax due for the prior year and withhold the difference between the total tax and the payments made in advance from the March salary. If the taxpayer is taxed jointly with his wife or husband, has borne deductible costs, or has sources of income other than his employer, then he is required to calculate his own tax and settle with the Tax Office by 30 April.

If the employee receives his remuneration abroad, then he must settle his monthly advances with the Tax Office appropriate to the place of his residence. Advances for consecutive months are calculated as the difference between the tax due from income earned from the beginning of the year and the total amount of advances paid in preceding months.

Tax laws and practise are constantly being revised and, whilst every effort is made to ensure that the information in this tax newsletter is accurate and timely, no decision should be taken on the basis of the information herein without first consulting with KPMG Polska.

Should you have any questions in relation to the above issues, please contact:

   Oliver Sinton
   KPMG Polska
   LIM Center - Marriott Hotel - IX floor
   Al. Jerozolimskie 65/79
   00-697 Warsaw, Poland
   Tel: +48 (22) 630 7236
   Fax: +48 (22) 8300 796

This information was correct as of 24 December 1996.