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Does a normal Polish citizen working from Polish home need to pay tax for foreign works?


fufu 1 | 3
20 Nov 2010  #1
Dear Fellows,

i am a French engineer living in Tunisia,where i have my small engineering office; i know a young polish engineer who studied in Tunisia, and who has done in the past an internship at my studio for half a year; it was a successful experience for both parties. He finnished his studies 2 years ago.

So now, I am planing to hire him but as a freelancer and not a full time employee, to do some engineering and drafting works for me, but he is planing to go for a year or 2 to Poland to see his parents, as he never been there since he was 8 years old (he is now 27).Still, i will ask his services while he is in Poland.

My question is: if he is neither officially employed by me, nor a self employed in Poland (as he does not live there but he holds the polish citizenship), can he do the free lanc work to me from distance while being in his flat in Poland, and without paying any local income tax in Poland?

Thanks.

F
delphiandomine 83 | 17,625
20 Nov 2010  #2
My question is: if he is neither officially employed by me, nor a self employed in Poland (as he does not live there but he holds the polish citizenship), can he do the free lanc work to me from distance while being in his flat in Poland, and without paying any local income tax in Poland?

Of course not. He's legally resident in Poland, and must pay tax in Poland accordingly.
terri 1 | 1,620
20 Nov 2010  #3
Very, very complicated question.
My own personal overview is this. Generally, if a person is not ordinarily resident in Poland, having a home, business interests, family connection, then the Polish Government may not consider him a Polish domicile. If he owns a flat - they may say that he has business interests. It then depends, if the flat is left empty or he lets it out.

If he is not registered with a Tax office, it would be very difficult for them to prove exactly what he earned during his stay in Poland if his earnings were not from a business based in Poland (but this would mean that you could NOT pay him through Polish banks etc).

The worst thing is that he may not be insured in case of accidents, illness - but to overcome this, he would have to pay privately.
delphiandomine 83 | 17,625
20 Nov 2010  #4
My own personal overview is this. Generally, if a person is not ordinarily resident in Poland, having a home, business interests, family connection, then the Polish Government may not consider him a Polish domicile.

Poland doesn't have such tricky concepts as domicile - if you're resident in Poland for more than 185 days of the year, you're tax resident. If not, then you aren't tax resident.
terri 1 | 1,620
20 Nov 2010  #5
A person is not legally resident if he has not lived in the country for 19 years. He would not be 'zameldowany' anywhere.
delphiandomine 83 | 17,625
20 Nov 2010  #6
That doesn't matter - 'zameldowanie' has nothing to do with tax obligations here. You can live here for years, not be registered - but still have a liability for tax.

As far as Polish tax law is concerned, it's the amount of days spent in Poland that counts.
terri 1 | 1,620
20 Nov 2010  #7
I get your point about the 185 days in a year, however as a Polish person (with a Polish passport) has the right to enter and leave Poland anytime he pleases and as frequently as he pleases, it would be very difficult to PROVE that he has lived in Poland for the 185 days.

If during his stay he makes two trips abroad of 2 weeks each, would the 185 days rule be broken or when would the period be counted from?

What evidence would need to be provided that he has entered the country - would the airports or ports keep such information?
delphiandomine 83 | 17,625
20 Nov 2010  #8
I get your point about the 185 days in a year, however as a Polish person (with a Polish passport) has the right to enter and leave Poland anytime he pleases and as frequently as he pleases, it would be very difficult to PROVE that he has lived in Poland for the 185 days.

Not hard - all they have to do is look at his bank account. Bear in mind that the Polish tax authorities are no different to HMRC or anyone else - they can quite legally ask for statements from the bank account and so on. Also, bear in mind that they get a hell of a lot of tip-offs from jealous neighbours and so on.

Also, with tax, usually you have to prove to them rather than the other way round. A Polish citizen in particular should be taking care to prove their non-liability for tax.

If during his stay he makes two trips abroad of 2 weeks each, would the 185 days rule be broken or when would the period be counted from?

I'm not sure that temporary absences from Poland count as absences at all. I'm pretty sure they're not - but still, if he was deliberately sailing close to (but not over) the 185 day limit, then he would be well advised to keep detailed receipts proving his absence from Poland.
OP fufu 1 | 3
20 Nov 2010  #9
Ok,thanks for all feedback.

Let 's say he will stay not only 185 days, but 365 days,either with his family or renting a flat, but still he does not earn money from any local company/employer/bank or whatsoever local party, but only my payment sent through any medium from Tunisia: then he has nothing to claim at all, so no taxes at all. Correct?

PS: regarding insurance, i guess i agree with terri about paying privately the insurance, no prob ab that.
delphiandomine 83 | 17,625
20 Nov 2010  #10
Let 's say he will stay not only 185 days, but 365 days,either with his family or renting a flat, but still he does not earn money from any local company/employer/bank or whatsoever local party, but only my payment sent through any medium from Tunisia: then he has nothing to claim at all, so no taxes at all. Correct?

Then he is still liable for taxation. It really doesn't matter how he earns the money - for tax purposes, he's resident in Poland and therefore must pay tax.

Renting a flat would almost certainly provide the tax authorities with the evidence that he's earning money from abroad if he's not showing up on the Polish tax system. Bear in mind that some Poles can be bitterly jealous, even towards their own family - all it takes is one bitter uncle to report him and he'll be in a world of trouble.

I'm also reliably told that the usual punishment for tax evasion is a fine equal to 100% of what's owed, plus the original tax owed.

I'm not sure on how it works from your point of view, but as he's legally resident in Poland, something tells me that you should be registering with the social insurance institution to pay his social taxes as well.
terri 1 | 1,620
20 Nov 2010  #11
The fact is that if you stay in Poland for 366 days year after year and have no recorded earnings at all - there is nothing anyone can do. You can say that you are fed by your distant family, friends and sleep on their floors.
Lodz_The_Boat 32 | 1,535
20 Nov 2010  #12
and without paying any local income tax in Poland?

Here is something interesting ... he may not need to pay the tax. Depends on how and what amount you are to pay him ... on what grounds ... you should involve a bank here...
delphiandomine 83 | 17,625
20 Nov 2010  #13
The fact is that if you stay in Poland for 366 days year after year and have no recorded earnings at all - there is nothing anyone can do. You can say that you are fed by your distant family, friends and sleep on their floors.

In theory, yes. In practice, they're not going to buy it - living in a flat by yourself would be a telltale sign, as would almost any aspect of modern living. Then there's the simple, easy part that a Polish bank account will be paying interest - which will then be paid to the Urzad Skarbowy automatically. If you claim that the money is in an offshore bank account to pay for the flat/modern living/etc - then they'll want to see the details of the offshore accounts.

Don't forget that most people would crumble under investigation anyway.

About the only way to get away with it would be if you have rich parents who actually sustain your costs of living and who can demonstrate that they're paying for you to live.
terri 1 | 1,620
20 Nov 2010  #14
>>>>>Don't forget that most people would crumble under investigation anyway.
True, very true....
Crumble? I've seen grown men cry......
delphiandomine 83 | 17,625
20 Nov 2010  #15
Crumble? I've seen grown men cry......

And I bet that was with the British system, not the Polish system ;)

The biggest absurdity I've been hearing here is the way that they'll fine you, even if you go directly to them to admit the mistake. I know someone who went over the VAT limit entirely accidentally, they realised that they needed to register and went straight there - only to get a fine equal to the amount over the threshold (8000zl). Nuts.

I still maintain that the biggest threat doesn't come from the taxman snooping, but rather jealous family/neighbours.
henryson - | 17
20 Nov 2010  #16
Does a normal Polish citizen working from polish home need to pay tax for foreign works?

Define "normal" please!
henryson - | 17
20 Nov 2010  #18
So it could not be applied to anyone on PF?
OP fufu 1 | 3
20 Nov 2010  #19
You can ommit the expression " normal", i simply meant that he is not neither employed by a company, nor self employed (though this does not mean that an abnormal is so). Anyway, just ommit it, we are not going to debate linguistic, it was a mistake.

By the way, is it a must to pay his social taxes (as delphiandomine stated)? does he need it? or he can simply manage with a private insurance company?

And what about if the money is sent by western union as millions of people in the world do so? paypal ? online transfering ? cash via post?... then no bank needed, then no taxation needed.
convex 20 | 3,978
20 Nov 2010  #20
And what about if the money is sent by western union as millions of people in the world do so? paypal ? online transfering ? cash via post?... then no bank needed, then no taxation needed.

As has been stated a couple of times, if you want to do it illegally, just be creative. Legally, he should pay taxes.
OP fufu 1 | 3
20 Nov 2010  #21
Well, nobody wants to go illegaly here, we are looking for less costy spaces under the legality's umbrella. Anyway, it seems we will go for the taxes then, no playing around.

He has to poy tax, then both parties will have rest and sleep well.

Thank you all.
terri 1 | 1,620
20 Nov 2010  #22
The other way, of course, is to make sure that he is in Poland for less than the 185 days in any one year - keep the tickets of when he entered and left the country.

With insurance - no problem - better to pay for any medical attention when needed.
delphiandomine 83 | 17,625
21 Nov 2010  #23
By the way, is it a must to pay his social taxes (as delphiandomine stated)? does he need it? or he can simply manage with a private insurance company?

Maybe. I don't know how employment with a foreign-based company is handled in Poland legally. I'm not even sure that Poland recognises employment with an employer that isn't registered at all in Poland.

And what about if the money is sent by western union as millions of people in the world do so? paypal ? online transfering ? cash via post?... then no bank needed, then no taxation needed.

As I said, it's possible. But what happens when the jealous uncle reports him? The Polish taxman isn't known for being weak. In fact, they've forced (wrongly) several businesses out of business, and have refused to follow orders from the Supreme Court.

The other way, of course, is to make sure that he is in Poland for less than the 185 days in any one year - keep the tickets of when he entered and left the country.

Indeed, and keep detailed receipts of spending, along with proof of maintaining a residence outside of Poland.

Really, for the sake of not paying 19% tax, is it worth it?


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