Taxation In Poland

The Polish tax year runs from January 1 to December 31. In general, an individual is regarded as a permanent resident of Poland if he owns a property there which is available for his use, if his family is based there or if he spends over 183 days of the tax year there. Non-residents are only liable Income tax on Polish sourced earnings. Top personal income-tax rate is levied on earnings above 74,048 Polish zlotys (roughly 19,500 euro) per year and it amounts to 40%.

Poland has signed a tax treaty with Ireland.

Capital Gains Tax

There is no separate capital gains tax. If a property is sold within five years of it being bought, a 10% tax on the total transaction is payable. This can be avoided if the profits are used to buy more residential property within two years and subject to making a declaration that this will be done to the Polish tax authorities.

Property transfer tax

Sale of real estate is generally subject to VAT (see below). However, in certain cases (i.e. the supply of land which is not for development and VAT exempt buildings and constructions) the acquisition of real estate will be subject to a transfer tax (Civil Law Activities Tax) at 2% on the market value of the property instead of VAT.

Sale of a real estate enterprise (i.e. business as a going concern) is outside the scope of VAT and therefore subject to transfer tax, usually at an effective rate of 2% of the market value of the business's assets.

Gift and inheritance taxes

These apply at various rates from 7 to 20 per cent, depending on the relationship between donor and recipient. No tax applies if the donor or the recipient is non-Polish resident. Farmland and antique art are exempt.

VAT

Sale of real estate is generally subject to VAT levied at the standard rate of 22%. Provided that real estate is used for VATable activities, input VAT paid on the purchase may be either offset against output VAT or recovered in cash within 60 days.

Lease of real estate is generally subject to 22% VAT.

For more information on the Irish Double taxation agreement with Poland please click here

This document is only to be used as a guide to the tax systems in each country. It is not to be relied upon for tax planning reasons. Please contact Anne Brady DFK for advice if you require more information.