Polish tax residents pay PIT on their worldwide income. Non-residents are subject to Polish PIT on their Polish-sourced income only.
Personal income tax rates
General PIT rules provide for the rates shown in the following table:
|Annual taxable income (PLN)||Tax on column 1 (PLN)||Tax on excess|
|0||85,528||17%* of the base less the amount decreasing tax**|
*As of 1 August 2019, revenue under an official relationship, employment relationship, contract work, cooperative employment relationship and mandate contracts, received by the taxable person by the age of 26 are exempt from paying personal income tax, up to no more than PLN 85,528 in a given financial year.
**The amount decreasing tax varies from PLN 1,440 to PLN 0.01 and needs to be calculated individually based on taxable income (see Personal allowances in the Other tax credits and incentives section).
In many cases, non-residents can benefit from a 20% flat tax rate calculated on their revenues (i.e. with no deduction of costs). The flat tax applies to various sources of income, including management fees (but not to employment contracts). The above general rules, resulting from the Polish domestic legislation, may be modified by the applicable double tax treaties (DTTs).
The tax-free amount is set at PLN 8,000. This means that taxpayers earning less per year will be exempt from paying tax. On the other hand, in the case of earnings exceeding the minimum threshold, taxpayers will pay a degressive tax.
Individuals running business activities (as sole traders or as partners in partnerships) can opt for a flat 19% income tax rate, subject to certain conditions.
Lower PIT rate
As of 2020 adopted changes in the PIT Act contain reduction of the tax rate from 18% to 17%, while the tax rate of 32% for income above PLN 85,528 remains unchanged.
Lowering the tax rate will apply to all taxpayers who receive income taxed according to the general rules, including employees, pensioners, as well as entrepreneurs, who have not chosen a flat rate income tax or lump sum taxation.
Tax deductible costs
New provisions also provide over two-fold increase in deductible costs for employees. Monthly deductible costs due to one employment increases from month PLN 111.25 to PLN 250. The annual limit of tax costs from one employment currently cannot exceed PLN 1,335, and after the amendment it will increase to PLN 3,000. In the case of obtaining income from more than one employment relationship, the upper limit of costs will be increased from PLN 2,002.05 to PLN 4,500.
As of 1 January 2019, individuals who derive in a tax year income exceeding PLN 1 million are obliged to pay solidarity tax at the rate of 4% on the excess of this amount. An obligation of submitting a separate tax declaration by 30 April of the following tax year will also apply.