Tax residency in Poland for digital nomads can be of interest to specific categories of digital nomads. We’ll dive deeper into the specifics in this article.
Living in Poland
Poland is part of the European Union and Schengen Area. Consequently, if you have a EU passport, you can just move to Poland without the need to qualify for a specific residence permit. You will need to register yourself and apply for a residence permit. However, this is just a formality.
If you don’t hold a EU passport, you might need to apply for a residence permit. You can find more information on the website of the Polish government.
Polish tax rules
Tax residency in Poland
You become a tax resident of Poland if you spend more than 183 days there during the year. Another way to become a Polish tax resident is to have your centre of vital interest in Poland. In another article, I already discussed the nuances to this. You can read the details here.
Tax residency in Poland for digital nomads: tax rates
The personal income tax rate in Poland amounts to 12% for an income up to PLN 120.000 (around €26.000). If you earn more than this threshold, the income tax rate is 32% for the excess. If you make more than PLN 1.000.000 (around €223.000), you will need to pay an additional solidarity tax of 4% on your income above this threshold.
However, if you are self-employed, you can also opt to apply the flat corporate tax rate of 19%.
On investment income (dividend, interest, capital gains) you will generally pay 19% of personal income taxes.
Tax residency in Poland for digital nomads: social contributions
The amount of social contributions you pay will depend on the tax regime you fall under. If you opt for the corporate tax rate as a freelancer, you will pay a 4,9% contribution. Unfortunately, your social contributions are only deductible up to around €2.200 per year. This means that if you make more than around €45.000 and pay social contributions thereon, the social contributions due on the amount above that threshold will not be deductible.
Setting up a company in Poland
Another option to structure your income through Poland is by setting up a Polish company. The standard corporate tax rate in Poland is 19%. However, Poland applies a reduced tax rate of 9% in case your company’s revenue is less than €2 million.
Furthermore, you can – just like in Estonia – opt to defer your tax payments to when you distribute a dividend. In order to apply this regime, you need to meet some conditions though. One of these conditions is that you employ at least three persons.
When you pay out a dividend your company will need to withhold withholding tax which amounts to 19%. As mentioned before, this is also the general tax rate for dividends.
Tax residency in Poland for digital nomads: conclusion
Tax residency in Poland could be interesting for digital nomads who fit within the first tax bracket of 12% or for those who want to register as a freelancer in Poland.