Settlement of Income Earned Abroad
A1 Certificate and Settlement, PIT 36 ZG, Foreign Settlements Office. Settlement of Income from Abroad for Companies.
A1 Certificate and Settlement, PIT 36 ZG, Foreign Settlements Office. Settlement of Income from Abroad for Companies.
Foreign Settlements Accounting Office – Professional assistance in global tax settlements..
Working abroad is a source of income that allows many people to maintain a higher standard of living in Poland. This is further encouraged by Poland’s relatively lower tax levels compared to the rest of the European Union. Unfortunately, the Polish tax and social insurance system (ZUS) is not one of the easiest or most user-friendly. That is why we provide accounting services to clients working abroad and managing their settlements in Poland.
The secondment of an employee to work in the European Union is an increasingly common method for many Polish companies to increase revenue and ensure jobs during an economic slowdown.
However, this involves many new obligations for companies regarding the settlement of employees working abroad. At Biuro Precyzja, we help manage the accounting, HR, and payroll for companies involved in international projects.
New! Growth Package: Accounting + A1 Certificate for Sole Proprietorships Earning Income Abroad
PLN 600
Assistance with obtaining an A1 certificate
from PLN 900,00
Assistance with determining tax residency
from PLN 800, depending on the number of documents
A 23% VAT tax will be added to the price.
The settlement of foreign income involves disclosing in your Polish tax return all earnings you obtained outside the borders of Poland. This income can originate from employment wages, pensions, annuities, business activity, investment profits, etc.
To correctly settle foreign income, you must be familiar with the tax regulations of the country where the income was earned. With some countries, there are Double Taxation Avoidance Agreements (DTAAs) that prevent income from being taxed both in Poland and abroad. In such cases, the foreign income will be taxed only in the country where it was earned, and in Poland, a tax exemption mechanism or a tax relief mechanism will be applied.
It is important to remember that failing to disclose foreign income in your tax return may result in financial or even legal consequences. Therefore, it is crucial to thoroughly understand the rules for settling foreign income and to seek the help of a specialist if you have any doubts.
That is why we always invite you to consult with Biuro Rachunkowe Precyzja! We will explain clearly and concisely what needs to be done and will assist you in settling your income earned abroad.
Income earned abroad must be settled in the tax declaration filed in Poland. Individuals settle foreign income in the PIT declaration, while legal entities do so in the CIT declaration. To settle foreign income, you must::
Expert Advice:
This document is required when an entrepreneur intends to work in a country other than Poland.”
The ZUS A1 Certificate confirms that an entrepreneur is covered by insurance in Poland and is therefore obliged to pay social insurance contributions here. This prevents the entrepreneur from having to pay social insurance contributions in the country where they plan to work, thus avoiding double taxation and double insurance..
The A1 Certificate is practically always required from Polish entrepreneurs who want to work in European Union countries. Thanks to it, Polish carpenters, construction workers, roofers, and engineers working there under contract are covered by health insurance and have guaranteed access to doctors if necessary. Furthermore, this work also counts towards their future pension, influencing the final amounts of pensions and other social insurance benefits to which the entrepreneur will be entitled..
First and foremost: it makes finding good work abroad incredibly difficult. Serious employers in European Union countries don’t want problems with their local social security (ZUS equivalent) or agencies controlling safety and working conditions. Working “under the table” is never a good solution.
However, there are other legal arguments to keep in mind:
If an entrepreneur does not hold a valid A1 Certificate and performs work abroad, they may be forced to pay social insurance contributions in the country where they are currently working. This can lead to double taxation and double insurance payments. Furthermore, in the case of illegally working abroad without the required permit or a valid A1 Certificate, the entrepreneur can be penalized with a fine or even imprisoned.
The final argument for obtaining an A1 is your pension. It’s not worth giving up on it by not paying ZUS contributions.
A professional accounting firm for foreign settlements. Thanks to our services, you can focus on business development, with confidence that your settlements are in the hands of professionals.
The secondment of an employee to work in the European Union must be settled in accordance with the regulations regarding the EU social security coordination system. Seconding an employee to work in the EU means that the employee remains employed in Poland and continues to be subject to Polish social security regulations, but during the secondment period, they will perform work in the territory of another European Union member state.
To settle the secondment of an employee to work in the European Union, you must:
1. Determine if the secondment is subject to social security coordination. Seconding an employee to work in the European Union is subject to social security coordination if the employee will perform work in the territory of another EU country for a period longer than six months..
2. Submit an application to ZUS for an A1 certificate. The person employing the seconded employee should submit an application to ZUS for an A1 Certificate, which confirms that the employee is covered by the Polish social security system during the secondment period.
3. Report the employee’s secondment to ZUS. The person employing the seconded employee should report the secondment to ZUS within 30 days of the employee’s departure date.
4. Maintain settlements with ZUS in accordance with applicable regulations. The person employing the seconded employee is obligated to conduct settlements with ZUS in accordance with the current regulations.
Posting an employee (Delegowanie) means that the employee is employed in Poland and is subject to Polish social security regulations, but during the posting period, they perform work in the territory of another European Union member state. The EU social security coordination system applies to the posting of an employee, which ensures the employee has the same rights and obligations as they would have in Poland.
Secondment abroad (Oddelegowanie) means that the employee is employed in Poland, but during the secondment period, they perform work outside the territory of the European Union. The EU social security coordination system does not apply to secondment abroad, and the employee is subject to the social security regulations of the country where they work.
A company can send employees abroad to work in several ways, depending on the purpose and nature of the trip and the applicable legal regulations. To send employees abroad to work, the company must first meet the legal and formal requirements for posting or seconding employees abroad. Depending on the country to which the employees are sent, different regulations and requirements may apply.
Here are a few options for sending employees to work abroad:
To send employees to work abroad, a company must, among other things:
In any case, before sending employees to work abroad, you must familiarize yourself with the applicable regulations and report the secondment to the appropriate body.
The primary purpose of the A1 Certificate is to confirm coverage under the social security system of the state that issued the document, which in our case is Poland. In practice, this means that a person who holds the certificate is not covered by the social security system of the country where the work (employed or self-employed) is performed.
The obligation to register for VAT-EU falls on an entrepreneur who intends to conduct transactions with foreign contractors within the EU member states. This obligation also covers companies benefiting from a VAT exemption that will conduct intra-Community transactions. To register, the taxpayer must submit relevant documents to the Tax Office. The VAT-R form is used for this notification.
If the entrepreneur is already registered for VAT purposes (as an active or exempt taxpayer), they only need to report an update on the indicated form. An important element of the form is the field regarding the date of commencement of intra-Community transactions.
There are no EU-wide regulations that govern how the income of EU citizens who live, work, or stay outside their country of origin is taxed.
However, the country of tax residency can usually tax all your income earned in any country. This applies to wages, pensions, benefits, income from real estate or other sources, and capital gains from the sale of property in all countries.
Individuals who have a place of residence for tax purposes in Poland (tax residents) have an unlimited tax obligation. This means they settle all income here, both earned in Poland and abroad.
An individual is considered to have a place of residence in Poland if they meet at least one of two conditions:
The issue of determining the taxpayer’s center of personal and economic interests influences the determination of their tax residency and, consequently, the tax obligation and appropriate taxation of income earned in a given country. Tax offices are very rigorous on this matter, as they often interpret situations in favor of the State Treasury.
Moving to another country with the entire family may result in the transfer of the center of personal interests to that country. Going to work abroad while the family remains in Poland may result in maintaining the center of personal interests in the territory of Poland.
In the case of single individuals, it is necessary to consider the state where the household is maintained and the state where the taxpayer participates in social, cultural, or political life.
It must be noted that the law lacks a precise definition of the center of economic interests. In practice, this refers to the place where an individual derives the majority of their income from employment, self-employment, professional practice, or running a business. Furthermore, factors such as investments held in a given country, movable and immovable property, deposits or savings accounts, and loans or insurance policies may also be taken into account.
A Double Taxation Avoidance Agreement (DTAA) is an international treaty aimed at protecting taxpayers who earn income in two countries from paying income tax twice.
DTAAs make it possible to eliminate double taxation. The primary goal of concluding DTAAs is to eliminate the phenomenon of double taxation in the legal sense. Other goals include promoting the exchange of goods and services, the free flow of capital and people. A further objective for concluding DTAAs is the prevention of tax evasion.
Poland has concluded DTAAs with most countries that are destinations for Polish economic migration, including all states of the European Union and the European Economic Area.
DTAAs determine where taxes should be paid when conducting business activity in Poland and another country.
They apply two methods for avoiding double taxation:
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Już drugi rok korzystam z usług tego biura i jestem bardzo zadowolona. Polecam 🙂
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Szukałem informacji w zakresie właściwym dla doradcy podatkowego, a nie księgowości. Jednak poziom empatii, chęć bezinteresownej pomocy, poświęcenie czasu i energii – to wszystko jest rzadko dziś spotykane w czasach pogoni za pieniądzem…
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Mam nadzieję na kontynuację współpracy, teraz już na zasadach pełnoprawnego klienta.
Dziękuję za pomoc i pozdrawiam serdecznie!
Od lat korzystamy z mężem usług Pani Olgi i biura Precyzja, i w 100% będziemy kontynuować współpracę, ponieważ jesteśmy bardzo zadowoleni. Trudne dla mnie kwestie finansowe stają się mniej straszne po konsultacji z Panią Olgą. Zawsze otrzymuję jasne i klarowne wyjaśnienia oraz wskazówki dotyczące dalszych kroków. Rozliczenia pitów są zawsze dokonywane na czas i w najkorzystniejszy dla nas sposób. Jestem zachwycona podejściem Pani Olgi do klienta – po każdej rozmowie czuję się zaopiekowana i spokojna. Polecam wszystkim
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Foreign companies can legally hire employees in Poland without opening a local entity by using an agreement that transfers the obligation to pay social security contributions (ZUS) to the employee, fully managed by Biuro Rachunkowe Precyzja.
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