Until last year Poland has treated the foreign income of Polish residents with a tax relief ‘ulga abolicyjna’ in a way that the foreign income was practically not taxed in Poland. This release has been from the 1st of January 2021 largely abolished and it has been limited to PLN 1.360.
Who is considered as a Polish resident?
There are two criteria to decide whether or not you’re being considered as a Polish resident:
1/ you stay more than 183 days per calendar year in Poland.
2/ your center of vital interests is in Poland (for example your family, properties and so on).
If one of these conditions is fulfilled, you’re considered to be a Polish resident by the Polish authorities. That means you must declare your worldwide income in Poland. For more information about the Polish residency visit: https://www.ey.com/pl_pl/hr-wave/test-rezydencji-podatkowej.
How much are you going to be taxed?
1/ The total amount of your income up to PLN 85.528 is being taxed on 17% minus tax-free allowance.
2/ The amount of your income over PLN 85.528 is being taxed on 32% minus tax-free allowance.
The tax relief may vary depending on your personal situation.
Note that you are not treated with a double taxation. If you already paid taxes in the foreign country where you earned your foreign income, then this amount is being deducted from the Polish taxes. This deduction cannot, however, exceed that part of tax calculated before the deduction, which proportionately falls to the income earned in Belgium. You are being taxed only on the difference between the tax in Poland and the tax you have already paid in a foreign country.
What does it mean practically?
If you are a Polish resident and you work in Belgium, you have to declare your Belgian income in Poland. Your declaration must be submitted by April 30 of the year after the income year.
When you are prepaying the tax on your full income in Belgium (income from your employment contract and other allowances such as holiday pay and end year bonus), that’s comparable with the Polish tax system (17% and higher in case of income over PLN 85.528), it’s very likely that you won’t be paying an additional tax in Poland. This by applying tax credit for your foreign source income.
On the other hand, once you have worked in Belgium, but you didn’t pay any or lower taxes in Belgium, your Belgian income will be fully or partly taxed in Poland. As the income from Belgium is possibly significantly higher compared to a Polish income, it could result in way higher taxes comparing to previous years when you worked abroad.
In case you prepaid too much taxes in Belgium you will receive return from the Belgian authorities after the settlement.
In case you prepaid too less taxes in Belgium and as a consequence you had an additional tax as in Poland as in Belgium after the settlement, the amount you still have to pay in Belgium you can get returned from the Polish authorities. So you are not being double taxed. Note that this could take some time and be an administrative challenge.
The conclusion is that how more taxes you prepay on your Belgian income how less chance you will must pay an additional tax in Poland and have additional administrative duties.
We strongly advise you to let your file be treated by a recognized accountant.