Tax residence and personal income tax settlements

The status of tax residence in Poland is crucial for the correct settlement of personal income tax.

Polish tax residents are obliged to settle income tax in Poland on their total income, both domestic and foreign (unlimited tax liability).

Polish non-residents for tax purposes, on the other hand, are only subject to taxation in Poland on income from Polish sources (limited tax liability). Other income earned abroad is not subject to taxation in Poland.

Criteria for determining tax residence in Poland

A Polish tax resident is  person who has place of residence in Poland, i.e.

• has a centre of vital interests in Poland OR
• spends more than 183 days in a tax year in Poland.

Each of these criteria must be considered separately and independently. The conjunction ‘OR’ means that meeting at least one of them allows a person to be considered a Polish tax resident.

Centre of vital interests

The centre of vital interests refers to a person’s personal situation, in particular to the centre of personal OR economic interests.

The centre of personal interests is the place with which a person has close personal ties, i.e. family and social ties – the place of undertaking social, political, cultural and sporting activities, belonging to organisations or clubs, pursuing hobbies, etc.

In practice, the most important factor taken into account is the presence of a spouse, partner or minor children in Poland. Therefore, moving to another country with the whole family will, in most cases, result in the transfer of the centre of personal interests to that country. On the other hand, going abroad to work while your spouse and children remain in Poland will usually mean that the centre of your personal interests remains in Poland.

The centre of economic interests, on the other hand, relates to economic ties. For example, it can be the place of gainful activity, the location of the main source of income, bank accounts, investments, loans, movable property and real estate.

Residence in Poland

In Poland, the tax year is the same as the calendar year. The criterion of length of stay should therefore be considered to have been met after 183 days of stay on Polish territory in a given calendar year. However, this condition does not mean that the stay must be uninterrupted.

The length of stay is calculated using the ‘days of physical presence’ method. Therefore, even part of a day should be taken into account, as long as it was spent in Poland.

Change of tax residence during the tax year

In the explanations issued on 29 April 2021 regarding the rules for determining tax residence and the scope of the obligation of a natural person in Poland, the Minister of Finance confirmed that it is possible to have a so-called broken tax residence, i.e. to consider a taxpayer as a tax resident in Poland only for part of the tax year, if certain conditions are met.

This usually happens when a natural person moves the centre of interests from one country to another during the tax year. As a result, the person is subject to taxation in Poland as a Polish tax resident for part of the year, and for the rest of the year is taxed in Poland only on income from Polish sources.

The correctness of such a solution in practice is also confirmed by the tax authorities in their tax rulings (e.g. in the tax ruling of 28 August 2024, ref. 0112-KDIL2-1.4011.558.2024.2.DJ). This ruling was issued at the request of a taxpayer who intended to start working at a university in China in 2024 and move her centre of life/personal/economic interests there. The Director of the National Fiscal Information agreed with the taxpayer that from 1 September 2024 due to the change of residence to China and her earning income from an employment relationship (with a Chinese university) and income from activities carried out personally from that moment on, there will be a change of tax residence during the tax year, i.e. she will cease to be a Polish tax resident. Thus, from that day until the end of 2024 (and in subsequent years, if all things being equal and circumstances being substantially unchanged), the taxpayer will not have an unlimited tax liability in Poland.