1. AmCham Snapshot update: personal income tax for expatriates in Poland
06 March 2014
Andrzej Marczak, partner Mateusz Kobyliński, director

2. (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR
Disclaimer
ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN BY KPMG TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF
(i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR
(ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN. The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.

3. Snapshot update: Personal income tax for expatriates in Poland
Agenda 1.
New Poland-US double tax treaty - update 2.
Polish personal income tax – changes for 2014 3.
Hot topics
04/09/2018

4. New double taxation treaty between Poland and the United States
NOT YET IN FORCE:
Ratified by Poland
Still NOT ratified by the US – no specific date known as yet
Date of entry into force still not determined
Key differences compared to current treaty:
change in method of avoiding double taxation for Polish tax residents – from credit method to exemption with progression,
reduced tax rate for royalties,
introduction of provisions on limitation of benefits afforded by the treaty,
income from employment - different method of calculating 183 days of presence,
addition of provisions regarding directors and sportsmen,
clear provisions regarding ‘other income’ not covered by other articles of the treaty,
specific rules regarding application of tax credit to US tax due for individuals who are simultaneously United States citizens and Polish tax residents,
provisions on non-discrimination and exchange of information brought in line with OECD guidelines in this respect.
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04/09/2018

5. Polish personal income tax regulations – changes for 2014
Joint stock partnerships (SKA) now subject to CORPORATE income tax
changes in corporate income tax regulations necessitated changes in definitions of a ‘company’ in personal income tax regulations
‘double’ taxation in an economic sense – income from SKA now subject first to CIT (at 19%), then to PIT (as capital gain at 19%), effectively taxed at ca. 34% (19% x % x (100 – 19%),
PIT withheld at source as tax on dividends,
concessions for general partners (komplementariusze) of SKA aimed at eliminating double taxation of profits – deduction for PIT purposes of CIT paid on profits attributable to the general partner, effectively reducing the PIT due to zero,
PIT deduction limited in time (5 years from end of year in which profit was attained),
numerous disatvantages for general partner of SKA compared to that of SK or others obtaining income from business activity, e.g.:
no option between 19% and progressive rates,
no possibility of offsetting losses from one activity against profit from another (e.g. SKA),
no posiibility of deducting social security contributions.
CIT deduction from PIT
Example:
Total profit of SKA in 2014 = PLN 700k
Profit attributable to general partner = 30%
CIT due on total profit = PLN 133k (700k x 19%)
CIT due on profit attributable to general partner = PLN 39,9k (133k x 30%)
Net profit for distribution = PLN 567k (700k – 133k)
Net profit for general partner = PLN 170,1k
PIT due on general partner’s net profit = PLN (170,1k x 19%)
PIT payable = 0 ( – )
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04/09/2018

6. Polish personal income tax regulations – changes for 2014
Sale of securities acquired through inheritance
in case of securities acquired as gift/donation:
no changes in method of calculating taxable base - at sale, only an amount representing the gift and inheritance tax paid at acquisition is exempt from taxation),
expansion of range of securities qualifying for exemption (previously only shares in companies)
in case of securities acquired through inheritance:
costs of acquisition of securities incurred at acquisition of the securities by the deceased may be deducted at sale by the heir
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9/4/2018

7. Hot topics Equity-based compensation programmes:
Numerous positive rulings of the District (WSA) and Supreme Administrative Court (NSA) :
deferral of taxation until moment of final sale of securities,
no taxation at the time of acquisition of shares (eg. through exercise of stock option or vesting of deferred stock, RSUs etc.),
contradictory to literal meaning of regulations, but…
…worth making use of as basis for applying for an MF ruling and subsequent reimbursement of tax (for past periods) or exempting income (for future events).
BUT:
Obtaining a positive ruling at the Minister of Finance uncertain,
Success probable at WSA (1st tier) although appeal of Minister of Finance in case of a positive ruling at the WSA level also probable,
Reaching a fully positive final conclusion may prove time-consuming
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9/4/2018

8. Hot topics Incentive programmes based on derivatives:
Numerous positive rulings of the District (WSA) and Supreme Administrative Court (NSA) :
deferral of taxation until moment of final realisation of contract,
no taxation at the time of acquisition,
potential savings – PIT and social security,
positive rulings of MF – both on grounds of PIT and CIT.
BUT:
Designing suitable derivative may be tricky – PIT definition of derivatives based on definition in Act on trading financial instruments, which definition in turn makes reference to MiFID,
Rulings necessary to ensure tax ‘safety’ of structure,
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9/4/2018

9. Hot topics 2013 annual tax return preparation and filing
Some things to remember:
exchange of information among tax authorities (especially within OECD),
30 April 2014 – final deadline for filing, with NO possibility of extention,
Sanctions based on fiscal penal regulations – for late filing, for non-disclosure etc.
deductions – changes in deductibility of Internet expenses, child relief
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9/4/2018

10. Contact details KPMG Tax M.Michna sp.k.
International Executive Services
Chlodna 51, XVI floor
Warsaw
Poland
Andrzej Marczak
Partner, doradca podatkowy
direct line: (+48 22)
Mateusz Kobylinski
Director, doradca podatkowy
direct line: (+48 22)
9/4/2018

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