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Foreign retirees taxed in Poland?


matina 1 | 2
12 Jul 2010 #1
Someone mentioned in one of the treads about paying taxes in Poland on foreign earned retirement funds.. is that true? Would for example US social security or/and other pensions, etc which are already subject to US taxation law be taxed again in Poland? For someone who never worked in Poland I may add.. some of my friends are dual citizens, some have only American passport. Would anyone know what's going on?
Ziemowit 13 | 3,915
12 Jul 2010 #2
I strongly doubt if this is true. I read this "news" in that other thread as well. Notice that people were just mouthing off ("in Poland you pay taxes on everything") with the only aim of showing how intelligent and knowledgeable they are.
nierozumiem 9 | 118
12 Jul 2010 #3
Matina, it really depends from where you are asking the question. US citizens & resident aliens (green card holders) are taxed on their worldwide income regardless of residence. Polish income tax is based on tax residency. Anyone spending more than 180 days in a year in Poland is taxed on their worldwide income.

So in a situation where a US citizen retiree becomes tax resident in Poland they will be taxed by both the IRS and the Polish Tax Office. There is a tax treaty in place between the US and Poland which will allow you to offset taxes paid to either country, in this situation your Polish tax obligations will likely exceed any US tax obligations. The Polish taxes can be used as a "foreign tax credit" on your 1040 and you will probably end up paying no US income tax.

some of my friends are dual citizens

This isn't relevant in the reverse situation. A dual Polish citizen living in the US has no tax obligation to Polish earned income.

Notice that people were just mouthing off

I suppose that is one way to describe tax law
OP matina 1 | 2
12 Jul 2010 #4
To avoid any misunderstandings, no argument with being taxed in US. In my situation all income was generated, allocated and reported to IRS. But I never worked in Poland, had no business of any kind with or in Poland and I wouldn't plan to engage in any industrious activities on my retirement in Poland... only would like to go fishing. A different scenario is when a person working (worked) in Poland and abroad actively generating income all over needs to report in various places and be taxed here and there. From what I read and I may be wrong, the Polish - American treaty on double taxation speaks to working people and doesn't address retirement, no?
convex 20 | 3,978
12 Jul 2010 #5
Polish - American treaty on double taxation speaks to working people and doesn't address retirement, no?

The double taxation treaty concerns personal income, doesn't matter how it's earned.
plk123 8 | 4,150
12 Jul 2010 #6
resident aliens (green card holders) are taxed on their worldwide income regardless of residence.

no.. but yes to citizens

A dual Polish citizen living in the US has no tax obligation to Polish earned income.

if they are an american then they surely do otherwise you are contradicting your statement from above.. regardless, and american has obligation to US on PL income.

The Polish taxes can be used as a "foreign tax credit" on your 1040 and you will probably end up paying no US income tax.

yes that is true

The double taxation treaty concerns personal income, doesn't matter how it's earned.

retirement income is always treated as earned income.
nierozumiem 9 | 118
13 Jul 2010 #7
no.. but yes to citizens

Resident Aliens (green card holders) are certainly taxed by the IRS on their worldwide income. The IRS does not differentiate between citizens and resident aliens.

IRS publication 54: "As a U.S. citizen or resident alien, your worldwide income generally is subject to U.S. income tax, regardless of where you are living. Also, you are subject to the same income tax filing requirements that apply to U.S. citizens or resident aliens living in the United States."

This isn't relevant in the reverse situation. A dual Polish citizen living in the US has no tax obligation to Polish earned income.

Oops, don't know where my train of thought was going. I meant to say that a dual Polish citizen living in the US has no tax obligation to Poland for US earned income.

Matina, there is a huge interest by US retirees in Offshore Retirement Havens, countries which do not tax worldwide income. There are endless websites devoted to this. Some countries, like Panama & Bahamas, are ideal for this sort of thing. But Poland, like most countries in the world, is not a good choice. The income tax thresholds are much lower than in the US, and income is taxed worldwide.
plk123 8 | 4,150
13 Jul 2010 #8
The IRS does not differentiate between citizens and resident aliens.

that's strange.. hmm... i am thinking once outside the states a green card holder doesn't ever have to own up to it.
scottie1113 7 | 898
13 Jul 2010 #9
OK, here goes. I'm an American teaching in Poland. As such, I pay Polish taxes on money earned in Poland, as I should. I file US taxes annually and have to declare how much I made in Poland. I provide the appropriate Polish form to document this. I can earn up to 91,000 US dollars in any country or countries outside the US before I have to pay taxes to the US on it.

I have applied for US Social Security-yep, I'm old. That money is not taxable in Poland, but it is in the US. It's a pretty simple system, and I've got the IRS publications which explain it.
convex 20 | 3,978
13 Jul 2010 #10
Just out of curiosity, why isn't it taxed on the Polish side as income? Polish authorities not being interested in taxing the income of a resident is bizarre :)
Ziemowit 13 | 3,915
13 Jul 2010 #11
Bizzare is speaking out an opinion conradictory to facts and then asking why the facts are bizzare.
nierozumiem 9 | 118
13 Jul 2010 #12
I have applied for US Social Security-yep, I'm old. That money is not taxable in Poland, but it is in the US.

Hi Scottie, I just want to be clear on what you are saying - You are tax resident in Poland, you collect Social Security checks from the US, you pay income tax on the SS to the US, but you do not pay income tax on this money to Poland? Do you have something from the Polish Tax office that allows you to do this?

BTW, as you said you are currently working in Poland. Many American expats are not aware that as of March 2009, the US and Poland have a Totalization Treaty in place, which is very good news. I think that your current contributions to your Polish pension can be used to bolster your SS.

ssa.gov/international/agreements_overview.html
convex 20 | 3,978
13 Jul 2010 #13
Bizzare is speaking out an opinion conradictory to facts and then asking why the facts are bizzare.

Thanks for that deeply insightful comment. So what are the facts? I'd be really happy to see anything that says that social security benefit payments are not treated as taxable income in Poland. The SS agreement from 2009 doesn't make any reference to US benefits not being taxable in Poland. I don't see how the totalization agreement would apply because the money is being taxed abroad.
delphiandomine 84 | 18,135
13 Jul 2010 #14
I'd be really happy to see anything that says that social security benefit payments are not treated as taxable income in Poland.

I'm surprised too - even if the tax office advises it so, I'd be inclined to pay the 50PLN (I think?) to get an official decision on the matter.
Ziemowit 13 | 3,915
13 Jul 2010 #15
The SS agreement from 2009 doesn't make any reference to US benefits not being taxable in Poland.

Are you sure that the SS agreement from 2009 is the one which tackles the problem of "US benefits not being taxable in Poland"?

The Polish bill on personal income tax ("ustawa o podatku dochodowym od osób fizycznych") directs you to "Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income" rather than to the agreement on social security that you indicate. Article 4a of the bill says that the rules for the taxation of income are applied accoording to the rules of the convention.
convex 20 | 3,978
13 Jul 2010 #16
I don't see how the totalization agreement would apply because the money is being taxed abroad.

The SS agreement doesn't, but the totalization agreement should.

Right, how does the totalization agreement work in practice for income earned and previously taxed abroad?
Ziemowit 13 | 3,915
13 Jul 2010 #17
I'm not sure if I get you right. The link you've provided is the link to the text of the PIT bill (ustawa) of which bill I've extracted article 4a: "Przepisy art. 3 ust. 1, 1a, 2a i 2b stosuje się z uwzględnieniem umów w sprawie unikania podwójnego opodatkowania, których stroną jest Rzeczpospolita Polska."

The bill is clear on that; it sends you to conventions on the avoidance of the double taxation, clearly assuming that some foreign citizens permanently residing in Poland may be exempted (and most probably are, in my view, when they receive a pension from their country of origin) from paying income tax in Poland. Such a convention was signed betwen Poland and the US in 1976 and if it states that pensions which have been taxed in the country where they are awarded (US, in our case) are exempted from taxation in the present country of residence of the retiree (that is, Poland), the matter is simple. It is the text of the convention between the US and Poland which is decisive in the case discussed.

I don't quite get what you mean by "totalization agreement". Is it the text of articles 3: 1, 1a, 2a, 2b of the bill stating that everyone is liable to paying a personal income tax in Poland?
OP matina 1 | 2
13 Jul 2010 #18
Nierozumiem makes a good point, there are many beautiful places where anyone, foreigner, or not, are welcome with open arms, anyone willing to move there for as long as they wish without paying tax penalty. As I gather Poland has much more appeal for Polish people who want to return to their roots, family, etc than for anyone else, so when I first got interested in the idea I was expecting the Polish Gov to actually offer some incentives of sort to returning Poles and to other people who'd like to retire in Poland, but it seems the opposite.

I was informed by Treasury Ministry (Wydzial Skarbu Panstwa) representative that any SS from USA, pensions, Roth, etc. once transfered to Poland as such are treaded as any other kind of income, exactly as many of you said. I was also told that there are 2 tax brackets in place.. funds up to 85,000 PLZ (after exchange rate) are taxed at 18% and 85,001PLZ + is taxed at 32%. Anything below 3,000PLZ per year is free from taxes. Go figure.
delphiandomine 84 | 18,135
13 Jul 2010 #19
I was expecting the Polish Gov to actually offer some incentives of sort to returning Poles and to other people who'd like to retire in Poland

What would be the sense in that? Retired people are unproductive.
plk123 8 | 4,150
14 Jul 2010 #20
they were very good incentives like that for expats to return.. i know a couple that took the deal as it was hard to pass up for anyone considering returning.. they didn't have to pay any taxes on their moneys or income.. they may now though.. not sure..

unproductive, maybe but they have money and they would be spending it in PL so a win for PL economy..

I was informed by Treasury Ministry (Wydzial Skarbu Panstwa) representative that any SS from USA, pensions, Roth, etc. once transfered to Poland as such are treaded as any other kind of income,

i think that's correct.. and as others said, you'd only pay over what you already paid in the us.. you should be able to get credit for paying US taxes..

Just out of curiosity, why isn't it taxed on the Polish side as income? Polish authorities not being interested in taxing the income of a resident is bizarre :)

because i am pretty sure that it's incorrect.. PL is less tax friendly then US.. but they may have limits for pensioners where under certain amounts one doesn't have to pay, especially if the income is from abroad..

It is the text of the convention between the US and Poland which is decisive in the case discussed.

yes but a person in PL would just have to pay the difference, like i said above.. one would get credit for US taxes.. that's not double taxation..

the US and Poland have a Totalization Treaty in place, which is very good news. I think that your current contributions to your Polish pension can be used to bolster your SS

the way i understood this is that it works in the opposite direction.. where the polish pension is bolstered by your SS from US.. basically they'd count your working years in USA and in PL together..
dman
29 Jan 2012 #21
The Polish Personal Income Tax Act (PITA) is available online in English at "Invest In Poland." www paiz pl / en (click on: Polish Law, Taxation, Personal Income Tax).

In Section 5(8) it declares "other sources" to be taxable and note [4] thereto says that "cash allowances from social insurance" is taxed. This however only applies if one has a place of residence in Poland and such place is defined as staying on the territory of Pland longer than 183 days during a tax year or having a centre of personal or economic interests here (centre of vital interests).

Said language hoever is not the final word on the subject if the country you come from has entered into an Income Tax Convention with Poland.

For example, the UNITED STATES - POLAND INCOME TAX CONVENTION (Easy to find online. Just search on that name.) states at Article 4, that if an individual is a dual resident in the US and Poland and has a permanent home in both or neither states, then he "shall be deemed to be a resident of that Contracting State with which his personal and econimic relations are closest (center of vital interests)."

Assuming that all Income Tax Conventions say the same thing, it appears then as long as it can be determined that one's center of vital interests is in one's home country, than one who has a same permanent home status in both countries is only liable in Poland to pay taxes on taxable Polish-sourced income.

This is not legal advise. Read the laws yourself and either consult with an attorney or spend 50 Zołtch to get a opinion on your personal case.
bluesman21
1 Sep 2012 #22
I am working on getting a Polish passport as my grandfather is Polish. I am from the US. If I receive a Polish passport, am I required to pay tax to the Polish govt on worldwide income if I do not live in Poland? I realize I must pay taxes in the US no matter where I live. I wanted to be clear on what are the responsibilities are in holding this Passport. What about estate taxes? If you never live in Poland but are a dual citizen are you taxed at all if you never live there? Please advise. Thanks
UsaPolishTreaty
25 Feb 2014 #23
From the USA-Polish treaty.
No taxes on ss

ARTICLE 19
Governmental Functions

(1) Wages, salaries, and similar remuneration, including pensions, annuities, or similar
benefits, paid from public funds of one of the Contracting States to a citizen of that Contracting
State for labor or personal services performed as an employee of the national Government of that
Contracting State, or any agency thereof, in the discharge...

books.google.pl/books?id=2tj7x5B_VEUC
slawekk - | 18
25 Feb 2014 #24
More accurate information at poland.usembassy.gov/tax.html
Maria Illinois
18 May 2020 #25
I am dual citizen and want to move to my old home town in Poland. I will have income from both Social Security and VA disability pension as as a surviving spouse. What income taxes do I pay in Poland as a non-working full time resident. Also if I purchase a residence, what taxes will I be liable for ?


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