As of January 1, 2022, the Polish Deal implemented the so-called relief for return on personal income tax. The purpose of this relief, according to the government's intention, is to encourage people currently living abroad to return to Poland. It applies to taxpayers who have lived and worked abroad for a minimum of three years and have moved their residence to Poland as of 2022.
Relief for return - what does it mean?
This is a tax relief that gives the taxpayer the tax-free right to the amount of PLN 85,528 in a given tax year. The relief is available for 4 consecutive years starting from the year in which the transfer of tax residence took place or from the year following the year of residence relocation to Poland. At the same time, the relief is only available if the residence was transferred to the Republic of Poland from 2022. If the residence was transferred in earlier years, the taxpayer cannot use the tax exemption.
What conditions are required?
Individuals who, among other things, are eligible for the relief:
- are subject to unlimited tax liability in Poland as a result of transferring their residence to the territory of Poland, and
- did not have a residence in the territory of Poland in the period including:
- three calendar years preceding the year in which they changed their place of residence in the territory of Poland, and
- the period from the beginning of the year in which the taxpayer changed his residence in the territory of the Republic of Poland until the date of change of tax residence (if this change took place during the tax year), and
- have Polish citizenship, the Pole's Card, citizenship of an EU country other than Poland, citizenship of a country belonging to the EEA or Switzerland, or
- have had a tax residence continuously for a period of min. 3 years (including the year of change of tax residence to Polish) in an EU country, EEA, Switzerland, Australia, Israel, Chile, Canada, Japan, Mexico, South Korea, United Kingdom, New Zealand or USA or
- have had continuous tax resident status in Poland for min. 5 calendar years before the date of departure from Poland for min. 3 calendar years and
- have a document confirming tax residency in other countries during the required period(s), such as a certificate of residency.
Types of income eligible for relief for return
The relief for return includes income earned from, e.g.: employment contract, business relationship, contracted work, cooperative employment contract, mandate contract, business activity (taxed according to the tax scale, 19% flat tax rate, 5% rate - the so-called IP Box relief and lump sum from registered income), as well as from maternity benefit.
What actions should be taken ?
Individuals who have transferred their residency to Poland after December 31, 2021, or are considering such a change in the following years, can benefit from the relief for return. For this purpose, those who want to take advantage of this relief on an ongoing basis when collecting advance payments during the year while already working in Poland, must submit to their employer a statement that they meet the conditions for taking advantage of the relief, under penalty of criminal liability.
Using the relief in practice involves not showing the income covered by the relief on the tax return. At the same time, it should be noted that if the taxpayer is also entitled to take advantage of other reliefs, such as the relief for the young people, the relief for working seniors or the relief for 4+ families, the limit of PLN 85,528 applies to all these reliefs together.
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