Poland's individual income tax is progressive, which means that the higher your income is, the higher your tax rate will be. Income tax rates, especially for high earners, are relatively low compared to other European countries.
In early 2009, the individual income tax rate was between 0% and 32%, depending on the level of income. Under certain circumstances, individuals can choose to apply for a 19% flat tax rate on their business income. Poland’s corporate tax rate is 19%.
Income tax is paid on the individual’s income as a wage earner or self-employed person.
For Polish citizens and permanent residents in Poland, all income earned in Poland and abroad is subject to Polish taxation. This is also true for people who have spent more than 183 days of the fiscal year in Poland. The fiscal year runs from January to December.
If a foreign resident is employed in Poland, he or she only pays tax on the income earned in Poland.
For employees, the amount of tax payable is deducted from the monthly salary by the employer. He pays it directly to the tax authorities. In the case of self-employment, you have to prepay an estimated income tax which is based on the previous year’s amount, or an estimate in the case of a new business.
Value Added Tax is at a standard rate of 22%. There are reduced rates of 7% and 3% for certain products and services, including foods. Moreover there are also VAT exemptions. They concern, for example, health services, milk products, insurance/banking services, mail services and stamps, educational, art and science services, provision on services for export.
All businesses must register for and pay VAT, unless they have a turnover of less than 10,000 €. Requirements include filing quarterly VAT returns to the tax authorities. VAT payments are due on the 25th day of the month following the period of the filing.