The recent status of the tax office is of great interest to those working abroad, especially in the UK – Krzysztof Koślicki will write in & nbspserwis Praw.pl.
Interpretation No. 0112-KDIL2-1.4011.928.2020.2.MKA issued a few days ago by the Director of National Tax Information confirms that the place where we should pay taxes must be determined according to the conditions in which the taxpayer resides permanently with his family and where he has a home in it.
The tax office is concerned with the case of a Polish man who left with his family to work in Great Britain and stayed there permanently. He used to come to Poland for a two or three week vacation. However, he had a registered business in Poland. It consisted of renting two rooms.
The revenue from renting these rooms was the only revenue for the company. The taxpayer income obtained from rent in Poland was spent on house maintenance in Poland, paying for utilities and heating the house.
Imposing taxes on workers abroad
We sometimes see the tendency of the tax authorities to try to “fish” for the Polish residency of Poles living abroad. Most often, the reason is the source of income in Poland, for example in the form of a registered business activity or owning real estate here. Fortunately, in the explanation discussed, the KIS director has moved away from the practice – referring to Tomasz Krzywański, the attorney on the GWW’s Individual Client Advice Team.
In his opinion, the position of the tax authority is of great importance to all Poles who, despite moving with their families abroad and having a permanent source of income there for years, have maintained some formal relations with Poland, for example in the form of a registered company.
See also: Income tax adjustment for the year 2020. Who falls within the second tax limit? An average salary of one and a half suffices:
As for residency, the time spent in the country matters
Tomasz Krzywański asserts that when deciding to exit, it must be remembered that the tax resident’s status is determined by whether the person in question will stay in Poland for more than 183 days in a tax case or have a center of vital interests in Poland.
So if we spent more than 183 days in Poland, despite working or living abroad, we would still be residing in Poland. Likewise, if we leave Poland for a longer period, but in Poland we leave the closest family – such as a spouse, minors under our care, or the proverbial dog. After that, even obtaining foreign tax resident status does not relieve us of the obligation to settle taxes on all income in Poland.
Therefore, it is important to successfully lose your Polish tax residency. Just receiving a foreign tax residency certificate will not free us from trouble. Some people forget that.
Reducing the penalty according to the new rules
As it turns out, it is vitally important that changes to the cancellation exemption, effective January 1 2021, have limited the possibility for Polish residents to obtain income from working abroad from deducting income tax paid in the source country from tax owed in Poland.
– So if we plan the move badly, at the end of the day it may turn out that we will have to double tax on most of our income –
The problem has additional significance, especially in & nbsp2021. All because of the recent major amendment to the provisions of the & nbspPIT Act and the substantial limit on the possibility of using the repeal. Many Poles work permanently in the UK, and only vacation in Poland a few times a year. Due to the change in regulations, taxpayers fear double taxation on income.
It is a natural concern. In the United Kingdom, the tax-free amount is several times higher than in Poland. If the taxpayer has to file a PIT-36 / ZG tax return and they even have the possibility to deduct the tax paid abroad, the deduction will not be sufficient to avoid a high tax in Poland. Consultant & nbspkancelaria KiB.
The expert notes that until now many judgments have been made to determine the center of life’s interests. I mentioned the tax authorities, as buildings to denote the center of life interests, first and foremost:
- Any family and social ties,
- Social, political, cultural and civic activity,
- Hobbies, etc.
However, when assessing whether the condition for having a center of economic interests has been fulfilled, the following must be considered in particular:
- Business Management,
- Sources of income,
- Owned investments,
- Real estate and movable property,
- Insurance policies,
- Loans taken,
- Bank accounts,
- The place where the person manages his property, etc.
As Monika Brzostowska recalls, many taxpayers, due to the reduction of the cancellation allowance, even wanted to give up Polish citizenship, close all bank accounts and check-out. Fear, above all, of being asked to pay up to 32 per cent. Income tax in a country you have not lived in for many years.
The expert notes that taxpayers fear that even a small factor connecting them to Poland might influence that they in & nbspoland will have to pay taxes, even though they are not Polish residents, because they don’t have a life center in & nbspPoland, and they don’t stay here 183 days.
The interpretation in question gives a spark of hope to the fearful. Taxpayers who have moved permanently to the UK, according to the KIS position, do not have to tax all income in Poland, provided, of course, that they are UK residents – and Monika Brzostowska sums up.