Poland

PIT is levied on an individual’s overall income. The taxable base is calculated as the sum of income generated from all taxable sources, subject to a number of exceptions (i.e. some sources are taxed separately and left outside the overall income calculation).

Income from a particular source is defined as the surplus of revenue from such source over the tax-deductible costs related to the same source. If within one source of income tax-deductible costs exceed revenue, the result is a tax loss (see Losses in the Deductions section for more information).

Employment income

Employee revenue includes basic pay, overtime pay, supplemental pay, awards and bonuses, compensation for unused holiday or vacation time, and all other monetary amounts and benefits in kind, as well as all other services obtained for free, from the employer.

Capital gains

Transfer of real property

Transfer of real property, if made within the scope of regular business activity, is taxed on general rules. Consequently, it is added to other business income and taxed based on the progressive scale or the 19% flat rate.

However, special rules apply if the transfer of property is made outside the scope of business activity. These rules vary according to the date on which real property had been acquired.

Generally, sale of real property shall not be taxed if the sale is made after the lapse of five years after the end of the tax year when the property in question was purchased (i.e. property acquired in 2018 or earlier can be sold free of tax in 2024).

If the above exemption is not applicable, real property disposal is taxed at a 19% rate calculated on income. The income equals the difference between the revenue on sale and the cost of earning that revenue, increased by the overall amount of depreciation allowances (if any) made on the property in question before the disposal. Revenues earned from the disposal of residential real estate can be exempt from taxation in some cases.

Transfer of shares

Transfer of shares is taxed at a separate 19% rate calculated on income (revenue less expenses on acquisition). The income is not added to income from other sources.

Dividend and interest income

Income from dividends paid by joint-stock companies and limited liability companies is not added to an individual's overall income. Instead, it is subject to 19% tax calculated on revenue (deductions are not available). The same rules apply to interest on loans and savings.

An exception concerns loans granted within the scope of regular business activities. If this is the case, the PIT rules concerning business income apply.

Exempt income

More than 130 types of income are tax exempt. The most important are the following:

• Damages received on the basis of administrative law, civil law, and other legal acts (subject to numerous exceptions).
• Receipts from property insurance and personal insurance claims (subject to some exceptions).
• Cash equivalents provided to employees when they need to use their own tools, goods, and equipment to perform work.
• Limited daily allowances and other amounts due to employees for the duration of business trips.
• Revenue from specific sources earned by taxpayers up to age 26 (so-called 'relief for young').

Regulations of the Polish Deal introduced the following new reliefs from 2022 (tax exemptions):

• Interest on late payment of a tax-exempt receivable (beginning in 2022).
• Revenue from specific sources earned by taxpayers who:
• have transferred their tax residence to Poland (so-called 'relief for return')
• raise four children (so-called 'relief for families 4+'), or
• are seniors and remain active on the labour market (so-called 'relief for working seniors').

Special rules for non-residents

Specified types of income, if gained by non-residents, are subject to special treatment. See the Taxes on personal income section for more information.