After consultations related to the tax part of the law changes known as the Polish Deal, the government decided to change some of its assumptions, including the relief for return from emigration.
Under the original assumptions of the Polish Deal, the relief was based on the tax deduction of an individually calculated amount, which was to be determined on the basis of the actual tax due for previous years. The relief was originally not limited in amount in any way, and also the circle of entitled persons was not limited (provided that they had documented their place of residence abroad for at least 3 years before moving to Poland). So how will this relief look like after the changes proposed by the government?
The regulations described below result from the draft amendments to the Personal Income Tax Act of 8 September 2021.
Who will be entitled to the relief?
Although the relief is presented as a relief for return from emigration, the group of people entitled to the benefit includes not only Poles who decide to return to Poland, but may also include people who have not had tax residence in Poland before. The persons entitled to the relief may be, among others:
- Polish citizens,
- holders of the Pole’s Card,
- citizens of an EU, EEA or Switzerland,
- people who have had their place of residence for at least 3 calendar years in certain countries, incl. EU and EEA member states, Switzerland, but also, inter alia, USA, Great Britain, Canada, Australia,
- persons who have had their place of residence in the territory of the Republic of Poland continuously for at least 5 years before the period of tax residence in another country before coming to Poland.
To take advantage of the PIT relief for return, the taxpayers will need to meet the following conditions:
- move their place of residence for tax purposes to Poland and, consequently, be subject to unlimited tax liability in Poland,
- prove that before transferring the residence to Poland, the taxpayer has not had a place of residence in Poland for at least three calendar years and had a place of residence abroad (certificate of residence).
Determination of the relief
The new formula of the relief calculation provides for a quota exemption for the income of eligible persons. The taxpayers will be entitled to the relief for 4 consecutive tax years, counting from the year in which the taxpayer moved their place of residence to Poland or from the following year. In each of the years, the taxpayer’s income up to PLN 85 528 will be exempt from the Polish PIT.
Thus, individuals entitled to take advantage of the tax relief will be able to reduce their PIT liability by up to approx. PLN 27 000 annually (in the case of taxpayers with income taxed at the rate of 32%) and the total benefit for all 4 years of applying the relief may exceed PLN 109 000.
PwC Comment
The provisions of the Polish Deal are still under discussion in the Polish parliament and the current proposals may still be subject to certain adjustments, but it is likely that the new relief may be available as of 2022.
We encourage you to follow the changes in this regard and to check the conditions for applying the relief in your situation. Due to the fact that in order to apply for the relief, the given individual would need to submit a certificate of residence, each person concerned should verify whether there is a possibility of obtaining such a certificate and the time of its issuance by foreign tax authorities.
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