PO proposes tax abolition for emigrants

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Prime Minister Donald Tusk plans to offer a major incentive to try to lure back Poles who have been working overseas to make more money.

Members of Tusk’s Civic Platform party have drafted a bill that would allow Poles who have worked in such high-paying countries as Great Britain and Holland to bring their earnings back to the country tax-free.
Zbigniew Chlebowski, head of the Public Finance Committee in the lower house, or Sejm, predicts that parliament will vote on the bill in a few weeks.

There is some question about whether the courts would find elimination of the overseas-tax provision constitutional because Poles working abroad would get the tax break while those working here would not. But the government plans to try to get it passed anyway.

The bill would apply to all Poles who have worked since January 1, 2004, in EU countries with no double-taxation agreements with Poland. The group consists of: the United Kingdom, Holland, Belgium, Austria, Denmark and Finland.
At the end of 2006, about 1.55 mln Poles were living in other EU countries, according to the Polish Central Statistics Office.
About 740,000 were in the six countries without double-taxation agreements with Poland.

Many of the 740,000 in the six countries have been reluctant to return to Poland for fear of having Polish tax authorities slap them with taxes and penalties on the money they earned overseas.
Poland levies an 18 percent tax on those who earn up to 85,528 zloty a year ? about 23,750 euro. Workers who make more than 85,528 zloty find themselves in a whopping 40 percent tax bracket.

Many Poles working in the six countries make considerably more than 85,528 zloty a year ? and thus would face a 40 percent tax bill on their overseas earnings. The 40 percent rate would apply even though they had already paid, for example, a 22 percent tax rate on their earnings in Britain.
The Civic Platform party made the overseas-earnings tax waiver part of their platform in the election campaign that ended in October.

If passed, it should help bring back work emigrants who are considering returning because of a vibrant Polish economy. Emigration has slowed in 2007 because of the good economy.
The government projects 6.7 percent economic growth in Poland this year, twice Britain’s rate.

In the last two years, Poland has created 1.2 mln jobs. With so many Poles working abroad, labor shortages are a problem.
That is the reverse of the high-unemployement situation a few years ago that sparked the emigration wave.”