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Poles going to live in the UK or elsewhere and their tax residency status? They pay tax to Poland?


InWroclaw 89 | 1,914
11 Apr 2014 #1
What is the position for Polish people who leave Poland and, for example, go to work in Britain indefinitely?

Once arriving in the UK and commencing work, who do they pay tax to? Because for a certain period of time they are technically tax resident in Poland, aren't they?

If Bogdan the bricklayer (I use this example because bricklayers in some parts of Britain are now supposedly able to command a salary of 500 tys PLN a year, or GBP100K) arrives in Britain and starts work, does he or his agent/employer send tax payments to the tax office in Poland for the period while he is still tax resident in Poland?

Does Agata the council office cleaner send her taxes home to Poland from her cleaning job in Hemel Hempstead until she becomes tax resident in the UK? How would she afford the accountancy fees? Accountants are very expensive on a cleaner's wages.

Does Beata the bus driver, driving the number 95 through Guildford, continue to do her PIT Poland tax return from the UK until she gains UK tax residency?

Doe she also record her UK banks' savings interest and send the Poland tax office the tax due on that?

I'm curious as to how this works. If I don't get an answer here, I'll try to delicately tackle the subject with Poles when I'm back home in Britain shortly. But, if anyone can answer my curiosity now I'd be grateful.

I forgot to point out:
in Britain, most single people don't have to pay income or savings tax until their income is approx. GBP10K (ten thousand quid). In Poland, it's approx. GBP600 (six hundred quid, yes a lot less). That means, in theory, a Pole who finds work in the UK is likely to have a tax liability with the Poland tax office from (typically) the 3rd week of their job in the UK. After gaining UK tax residency (after a qualifying period, I assume) they would probably be able to benefit from the UK's much more generous tax-free earnings limit (although I'm not sure exactly on that).

If it's covered by 'double taxation' rules, could someone explain to me how this works in this situation. Because it would seem that Poles in the UK would under these circumstances gain tax-free status until GBP10K, or still have a Poland tax liability on their earnings after GBP600 and until GBP10K.
jon357 71 | 20,328
11 Apr 2014 #2
The two countries have a dual taxation agreement so people pay tax where they live and work. The UK recognises that people up sticks during the tax year. Poland's taxation system is less efficient, but they are also less efficient at collecting, so people just ignore them.

In any case, the cleaner Agata that you mention would find much of her income covered by her UK personal allowance and therefore untouchable by Poland - much as the Urzad Skarbowy would love to nab her wages, they can't. Poland also has to respect Working Tax Credits that provide such an important part of many poorer families' income.

Worth mentioning that in Poland you can't easily work for cash (unless it's receipted and declared and you're registered as self-employed and you declare it monthly) whereas in the UK you can, provided you declare it yearly.

Given the choice, most people would prefer to pay tax in the UK than Poland, not least because of the personal allowance.
OP InWroclaw 89 | 1,914
11 Apr 2014 #3
The two countries have a dual taxation agreement so people pay tax where they live and work.

From the moment they land and start working and not after any qualifying period?

Thank you for answering, Jon.

Please confirm this: the Poland earnings limit of approx. GBP600 is not applicable to a Pole in the UK during the period they would otherwise be considered tax resident in Poland? In other words, they assume the earnings limit of their host country immediately as if they were immediately tax resident in the host country?

Please also confirm: Bogdan's UK bank savings interest (say for example it's GBP1K) from his bricklaying job in South Shields is not taxable as world income by the Poland tax office during the time he would otherwise still be considered tax resident in Poland, regardless of whether interest was paid monthly or annually? The reason it's not taxable is because it's under GBP10K or because of some other taxation rule?
jon357 71 | 20,328
11 Apr 2014 #4
It doesn't quite work like that because Poland's approach to new situations tends to be reactive. Since the income is not generated within PL they have no way of knowing what the person earns in the UK unless they go to court in the UK to find out. Providing Jacek or Wojtek haven't left a business open that should be declaring income or lack of it, there's nothing they can really do.

Basically, what they don't know about, they can't touch.

There are plenty of grey areas, however the Polish tax system is not a good one about responding to reality. What it is good about is not chasing income that doesn't derive from or end up (traceably) in Poland.
OP InWroclaw 89 | 1,914
11 Apr 2014 #5
Thank you for replying again, Jon.

The difference in the tax-free allowance between the two countries must make many Polish people gasp in disbelief when they arrive, even after adding in some of the disadvantages such as council tax, higher energy bills, high telecom costs, TV licences etc. Plus there's no need to pay national insurance on low earnings in the UK if self-employed (small earnings exemption) and on top of that 10K tax free income! No wonder the Poles I ask in the UK almost always reply "Return to Poland? Hahaha What?! Never. Maybe when I retire, but probably never."
jon357 71 | 20,328
11 Apr 2014 #6
Indeed. Poland has a fiscal economy which is great for some, in civil service jobs or working for large companies, especially at Dyrektor (not the same as the UK term Director) but not for many. The UK has particularly good taxation and of course an underlying concept that illness, joblessness or disability isn't the fault of the individual or their family and that the responsibility for the well-being of individuals is collective.

Poland does however have one big plus as far as tax is concerned: liability for tax generally (there are a few exceptions that affect almost nobody) kicks in at 183 days per year rather than the UK's 90.
Harry
11 Apr 2014 #7
liability for tax generally (there are a few exceptions that affect almost nobody) kicks in at 183 days per year

Not necessarily. It is entirely possible to spend fewer than 183 days Poland and still be a Polish tax resident, what matters is where one's 'centre of life interests' is.
jon357 71 | 20,328
11 Apr 2014 #8
Exactly - that's the catch, though it's so vague that it's very hard to enforce unless someone is operating businesses back home. Most in that situation just operate their business as a Polish agency of a foreign entity.
Monitor 14 | 1,820
11 Apr 2014 #9
South Shields is not taxable as world income by the Poland tax office

There is no world income only single agreement country with country. There are some countries which don't have such agreement with Poand or less favorable and then Pole has to pay tax if he lived there.

The difference in the tax-free allowance between the two countries must make many Polish people gasp in disbelief when they arrive

that what you say is how countries treat less fortunate - lower earning population. So many Poles while moving to UK and taking lower payed jobs are gaining double: 1st because they move to higher wages country and 2nd because they benifit tax exempt for poorer people. If somewhone is earning well, then more important than tax free amount is total taxation (as bigger chunk of their salary is not tax free anyway).

Poland does however have one big plus as far as tax is concerned: liability for tax generally (there are a few exceptions that affect almost nobody) kicks in at 183 days per year rather than the UK's 90.

Are you saying that if British spends 90 days in UK and the rest in Poland then he has to Pay tax both in UK and Poland?

Also how do they count the 183 days? Because different countries have tax year in different months. (not from January 1st to December 31).
jon357 71 | 20,328
11 Apr 2014 #10
Are you saying that if British spends 90 days in UK and the rest in Poland then he has to Pay tax both in UK and Poland?

See below:

The Polish tax office works according to the Polish tax year.
Monitor 14 | 1,820
11 Apr 2014 #11
So this agreement changes 90 days into 183 for British when it concerns Poland - Britain?
jon357 71 | 20,328
11 Apr 2014 #12
No. No change. Both countries have their own systems however a dual taxation agreement means they do not charge tax on money that has been taxed under the other system.
Monitor 14 | 1,820
11 Apr 2014 #13
Does it mean that British citizen who stayed for 184 days in Poland but the rest in UK has to pay taxes for money earned in UK in UK and for money earned in Poland in Poland? It's more than 90 days in Britain and more than 183 in Poland.

On the other hand Pole who would work for 184 days in UK and the rest in Poland would need to pay taxes for earnings in Poland and UK , in UK only? Because he would spend less than 183 days in Poland?
johnb121 4 | 184
11 Apr 2014 #14
Non-contemporanious tax years are the bane of the tax adviser and the dual resident. The simple answer is that each country looks at your position according to its own laws, then consults the double tax treaty, but then you get a major complication if the two "years" are different. But the result will be that you will/will not be resident in the UK for a UK tax year or in Poland for a Polish tax year. It makes is extremey difficult to generalise. Throw in domicile and you have a whole tax adviser's career!
jon357 71 | 20,328
11 Apr 2014 #15
Does it mean that British citizen who stayed for 184 days in Poland but the rest in UK has to pay taxes for money earned in UK in UK and for money earned in Poland in Poland?

In short, no.

As johnb121 says, it's a matter for tax advisors. And it only really affects the very rich whose advisors are adept at working round such issues and negotiating with various jurisdictions if need be.

For most people there isn't any sort of issue of dual residency, and in any case, where the UK is concerned the vast majority of people, including those from Poland, are on PAYE.

Of course there's no shortage of people who are tax resident in neither jurisdiction, plus expats (in the precise sense of the word) paying equalised tax.


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