Do you hold a permanent residence permit? This could deprive you of return relief

The current position of the tax authorities confirms that people immigrating to Poland permanently who do not have a Pole’s Card on the date of their move – either because they have not applied for it before or have already obtained a permanent residence permit – cannot benefit from the PIT exemption.

The exemption known as the ‘return relief’ is available to those holding a Pole’s Card, with the proviso that they move their residence to Poland and only later apply for a permanent residence permit. This premise allows them to benefit from a relief exempting them from paying income tax on income up to PLN 85,528 per year for four consecutive years.

Return relief – who can benefit from it

The return relief introduced at the beginning of 2022[1] allows taxpayers who have not had a place of residence in Poland for the last three years and decide to permanently move to the country not to pay personal income tax on income up to the amount of PLN 85,528 per year for four years, counting from the beginning of the year of return or from the beginning of the following year.

In order to benefit from the relief, it is necessary for the taxpayer to fulfil certain conditions[2]:

1. as a result of a transfer of residence to the Republic of Poland, the taxpayer must also transfer its tax residence to Poland, and
2. the taxpayer must not have been resident in the territory of the Republic of Poland during the three calendar years preceding the year of the change of residence and until the date of the change of residence in the territory of the Republic of Poland (in the year in which the change occurs), and
3. the taxpayer:
   • has Polish citizenship, a Pole’s Card or citizenship of a member state of the European Union or a member state of the European Economic Area or of the Swiss Confederation other than Poland, or
   • has his/her place of residence for a continuous period of at least three years preceding the year in question and the period from the beginning of the year to the day preceding the change of place of residence in a country of the European Union, the European Economic Area, Switzerland, Australia, Chile, Israel, Japan, Canada, Mexico, New Zealand, South Korea, the United Kingdom of Great Britain and Northern Ireland or the United States of America, or
   • in the case of a residence in another country, has had a place of residence in the territory of the Republic of Poland continuously for at least 5 calendar years preceding the period of residence outside the territory of the Republic of Poland referred to in point 2, and
4. the taxpayer holds a certificate of residence or other evidence documenting his/her residence for tax purposes for a period necessary to establish the right to that exemption, and
5. the taxpayer has not previously benefited from a return allowance.

It is crucial that at the time of moving to Poland, the taxpayer meets the above criteria. The PIT exemption is granted for four years from the beginning of the year of return or from the beginning of the following year.

The place of residence is determined by two main criteria[3]:

• having a centre of personal or economic interest (centre of vital interests) in Poland;
• residing in Poland for more than 183 days in a tax year.

Return relief – various cases indicated in interpretations

The Director of the National Fiscal Information Service (KIS Director) has repeatedly issued interpretations regarding the conditions for taking advantage of the return relief, which confirm strict compliance with the regulations. Thus, in order to benefit from the return relief, it is necessary to have the documents specified in the law and it cannot be any other document, such as a permanent residence permit in Poland.

For example, an individual interpretation of 11 June 2024[4] concerned a Belarusian IT specialist who, on the basis of a national visa and a Pole’s Card, came to Poland in 2021 and legalised his stay, which involved surrendering his Pole’s Card. His family did not move to Poland until May 2022, which meant that he had residence in both Poland and Belarus. The director of the KIS indicated that, until May 2022, the taxpayer’s centre of life interests was in Belarus, making him ineligible for the relief.

Another interpretation of 29 April 2024[5] concerned a Belarusian who, despite his Polish origin, did not have a Pole’s Card. After moving to Poland, he obtained a permanent residence permit and Polish citizenship in January 2024. The director of the KIS concluded that he did not meet the conditions for the relief at the time of moving to Poland, as he did not have a Pole’s Card or EU citizenship, thus he could not benefit from the return relief.

The case described in the interpretation of 11 June 2024[6], on the other hand, presents the situation of a Belarusian who held a Pole’s Card at the time of moving to Poland in March 2023, and only applied for a permanent residence permit in July 2023. As a result, he fulfilled the conditions to benefit from the return relief, which allows him not to pay PIT on income up to PLN 85 528 per year for four years.

In contrast, the interpretation of 7 February 2024[7] concerned a Ukrainian citizen who arrived in Poland in February 2022 and has been living in Poland continuously since then. Since arriving in Poland, the centre of the taxpayer’s personal and economic interests has been in Poland. In addition, prior to moving to Poland, the taxpayer had never lived in Poland or any other country, excluding Ukraine. Short-term stays in Poland lasted at most a few days and were of a tourist nature. As at the date of the transfer of residence to Poland, the taxpayer held a valid Pole’s Card and subsequently received a decision on a permanent residence permit in the territory of the Republic of Poland. The taxpayer also confirmed that he had lived in Ukraine all his life, studied there and was registered there. The taxpayer also had a certificate of tax residency in Ukraine for the period covering the years 2019-2021. The above criteria confirm that all the prerequisites required to benefit from the so-called ‘return relief’ are met[8].

Summary

These cases show how important it is to follow the right sequence of actions and meet all legal requirements at the time of moving to Poland in order to benefit from the return relief. The regulations leave no room for flexibility and the interpretations of the Director of the KIS unequivocally indicate the necessity to have the Card of the Pole or relevant citizenship on the date of the change of residence.

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[1] Introduced under Article 21(1)(152) of the PIT Act.

[2] The conditions set out in Article 21(43) of the PIT Act.

[3] Pursuant to Article 3(1a) of the PIT Act.

[4] Individual interpretation of 11 June 2024, ref. 0112-KDIL2-1.4011.401.2024.1.KF.

[5] Individual interpretation of 29 April 2024, ref. 0114-KDIP3-2.4011.248.2024.2.AC.

[6] Individual interpretation of 11 June 2024, ref. 0113-KDIPT2-2.4011.361.2024.2.SR.

[7] Individual interpretation of 7 February 2024, ref. 0115-KDIT2.4011.7.2024.1.RS.

[8] Referred to in Article 21(1)(152) of the PIT Act.