Exceeding the 183-day period of stay in Poland may have significant implications for foreigners (including war refugees from Ukraine) in terms of their tax obligations. Income taxes in Poland are payable by all individuals who:
- have the status of a tax resident (reside in Poland for more than 183 days a year or have their centre of interest here) – in their case, all income earned by them is taxed, regardless of where it is earned;
- are so-called non-residents (they do not meet the condition to be considered residents) – they are taxed only with respect to income generated in Poland.
The provisions of the double taxation treaty between Poland and Ukraine stipulate that a citizen (tax resident) of Ukraine may become a tax resident in Poland after exceeding the 183-day deadline. The determining factor as to whether such a situation occurs will be whether the centre of vital interests (e.g. immediate family, property owned by the person) of that person remained in Ukraine. An affirmative answer will result in recognition of the lack of transfer of tax residence to Poland. Consequently, such a person will be obliged to pay income tax in Poland only to a limited extent – i.e. on income earned here.
However, if a Ukrainian citizen fleeing the war moves his or her centre of interest to Poland, he or she will be liable to pay PIT (income tax) on all income earned from the first day of residence in Poland. It should be recalled that this applies to all income – including income that does not have its source in Poland (e.g. income from work or business activities).
The expiry of 183 days of residence in Poland also triggers tax consequences for those who have remained tax resident in Ukraine but provide work remotely from the territory of Poland. The aforementioned agreement between Poland and Ukraine provides that the place of work determines where the employee should be taxed. An exception to this rule is when the employer is not a Polish entity and, at the same time, the Ukrainian employee does not perform his or her work from the territory of Poland for more than 183 days during the year. If any of the conditions are not met, the tax should be paid in Poland.
To summarise, anyone whose period of residence in Poland has exceeded 183 days should consider whether and what impact this event will have on their individual tax situation.