The possibility for employees to work remotely from outside Poland (so-called "workation"), is often a benefit that increases the attractiveness of a given job offer. However, it's important to remember that working from outside Poland comes with certain limitations and challenges, especially regarding tax and insurance issues.
Tax Perspective
Individuals who decide to perform their professional duties remotely from the territory of another country must consider issues related to tax residency.
If, despite leaving Poland, the conditions for being recognized as a Polish tax resident remain met, the employee will still be subject to tax obligations in Poland on all their income. Employers will be obliged to calculate and withhold PIT tax advances from the salaries paid. In the annual tax return, the employee will report all their income as subject to taxation in Poland.
However, working from abroad will always require an analysis of the regulations resulting from the relevant double taxation avoidance agreements and the local laws of the host country. It is possible that an employee, remaining a Polish tax resident, will also be required to pay tax in the country where the work is performed. In such cases, generally, the entire income will still be subject to taxation in Poland, but the appropriate method of avoiding double taxation will apply - either exclusion with progression or proportional deduction.
In the event of losing the status of a Polish tax resident, the employee will be required to declare and tax all their worldwide income abroad. This does not exclude the necessity to tax income from Polish sources - including income paid for work on the territory of Poland if the work was performed in two or more countries during the year. Again, the double taxation avoidance agreements (if Poland has such an agreement with the given country) will apply. It is then necessary to verify the Polish and local regulations of the relevant country.
ZUS Perspective
The requirements related to social insurance vary depending on the country of residence. In the case of an employee deciding to work remotely within the European Union, the regulations of Regulation 883/2004 of the European Parliament and of the Council (EC) apply. Generally, an employee can only be subject to social insurance in one country, where the work is performed.
From July 1, 2023, the Social Insurance Institution (ZUS) has joined the Framework Agreement on the application of Article 16(1) of Regulation (EC) No 883/2004 in cases of habitual cross-border telework (remote work). According to the agreement, an employee who performs remote work from abroad will remain insured in the country of the employer's headquarters, provided that the work abroad does not exceed 50% of the total working time. Additionally, the condition for using the solutions of the above mentioned agreement is the employment of an employee with an employer with a registered office in a different country than the current residence of the employee for remote work purposes. To take advantage of the possibilities provided in the provisions of the agreement, a relevant application must be submitted to ZUS.
In practice, it may also happen that an employee will perform remote work from a country outside the European Union. In such a situation, bilateral international social security agreements apply. However, if Poland does not have such an agreement with the given country, it may turn out that the employee will be subject to the insurance system both in Poland and in the country where the work is performed.
PwC Commentary
Remote work from abroad is not as straightforward as it might seem. Before deciding to go abroad, it is necessary to thoroughly analyze the associated risks. Each time, one must determine their tax residency and examine the regulations in the destination country. In some cases, additional registration obligations may arise for both the employee and the payer in the second country. Therefore, before starting remote work from abroad, it is crucial to thoroughly familiarize oneself with the legal and tax requirements in both countries.
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