Digital Nomads in Poland and Their Legal Dilemmas: Taxation (6)

What are the taxation rules for digital nomads working remotely in Poland for foreign companies? What regulations apply to individuals working remotely in Poland but employed by foreign companies? What international agreements govern taxation issues?

The rules regarding the taxation of digital nomads working remotely for foreign companies in Poland can be complex and depend on various factors such as the length of stay, type of contract, and the location where income is earned. Below are key issues to consider:

Tax Residency

Under Polish tax law, an individual becomes a tax resident in Poland if they:

Stay in Poland for at least 183 days in a tax year, or
Have their center of vital interests (personal or economic interests) in Poland.

If a digital nomad meets either of these conditions, they must report and pay taxes on their worldwide income in Poland. For non-residents, taxation applies only to income earned within Poland.

Income Tax (PIT)

Digital nomads who are tax residents in Poland are subject to general tax regulations:

PIT tax rates: 12% for income up to 120,000 PLN and 32% for income exceeding that amount.
Obligation to submit an annual tax return (PIT-36 or PIT-37).

Double Taxation Avoidance Agreements

Poland has signed double taxation avoidance agreements with numerous countries. Key elements of these agreements include:

Rules determining where income should be taxed.
Methods to avoid double taxation, such as the exemption with progression method or the credit method.

Digital nomads should verify whether Poland has such an agreement with their employer’s country to avoid double taxation.

Working for a Foreign Company Without Local Business Registration

If a digital nomad works for a foreign company but does not register a business in Poland:

Their income is taxable in Poland if they are tax residents.
They may be required to pay income tax advances independently.

Business Registration

Some digital nomads choose to register a business in Poland (e.g., as a sole proprietorship) to simplify tax settlements. In such cases, additional rules regarding VAT and contributions to the Social Insurance Institution (ZUS) apply.

Social Security Contributions (ZUS)

Tax residents working for foreign companies may be required to pay social security contributions in Poland if they are not covered by the social security system in their employer’s country.