Despite the recently launched “Return Home” campaign by the Labor Ministry, small efforts are being made to amend Poland’s double taxation laws. Labor Minister Joanna Kluzik-Rostkowksa is encouraging young Poles to return to Poland from abroad. But little is being done to exempt their earnings from being doubly taxed by the Polish Taxation Office as well as being taxed by the country they are working in.Under current tax laws, tax is paid both in the country the wages are being earned and in Poland upon return.
According to Gazeta Wyborcza, the currency exchange rate means Poles working abroad find themselves in the highest tax bracket in Poland, at 40 percent.It is therefore the normal practice that most Poles who make a living abroad hide their remuneration from the Polish Tax Office, or simply do not return. Most are waiting through the five-year period of living abroad so that they can be tax exempt in Poland. Protocols are being drafted to enforce legislative changes and implement taxation agreements between Poland and Austria, Iceland, Belgium, Denmark and The Netherlands. Finland is also on the agenda.
The agreement would allow Poles working in those countries to be taxed only by the country in which they are employed. According to the Department of Finance, if such an agreement was to be enforced, Poles returning home would be exempt from double taxation. It is improbable the bill will be passed this year to include the abovementioned countries. The bill needs to be ratified by the Senate and the Sejm (Parliament) and it is unlikely this will be completed by the new taxation year. As Gazeta Wyborcza reports, such an agreement already exists between Poland and Ireland as well as the UK and other European countries.
No plans however are foreseeable to amend taxation agreements currently in place between Poland and Russia. The current agreement is not favorable to the Polish taxpayer.The taxation agreement between the UK and Ireland was amended at the end of 2006. Polish immigrant workers currently employed on the Isles are tax exempt upon returning to Poland. Negotiations between the U.S. and Poland to amend the taxation agreement are planned to commence in 2008.