Personal income tax in Poland: How to calculate and pay personal income tax correctly

Personal income tax (PIT – Podatek Dochodowy od Osób Fizycznych) in Poland applies to everyone who earns income in the country, regardless of whether they are Polish citizens or foreigners. Understanding how to calculate and pay PIT is important for both employees and entrepreneurs. In this article, we will look at the main PIT rates, the calculation procedure, the specifics of filing a declaration, and possible tax deductions.

Who pays personal income tax in Poland?

Everyone has to pay personal income tax in Poland:

1. Employees (employees who receive a salary, including foreigners).
2. Self-employed persons (freelancers, entrepreneurs and persons working on the basis of civil law contracts).
3. Persons receiving passive income (e.g., from renting out property or investments).

Differences in rates and tax benefits may depend on the type of income, income level and residency status.

Personal income tax rates in Poland

Personal income tax in Poland is calculated according to a progressive system. The following basic rates apply for 2024:

• 12% – for annual income up to PLN 120,000.
• 32% – for annual income over PLN 120,000.

In addition, there is a tax rebate of PLN 3,600 per year for people with income in the first category. This discount is automatically taken into account when calculating the tax and reduces the total tax liability.

Calculation of personal income tax

The process of calculating personal income tax depends on the type of employment and income level.

1. Calculation for employees

Employers are required to withhold personal income tax from employees’ salaries on a monthly basis and pay it to the tax authorities. The calculation is as follows:

• Mandatory social and health insurance contributions are deducted from gross income (wages).
• The remaining income is taxed at a rate of 12% or 32%, depending on the amount.

For example, if the employee’s annual income is PLN 100,000, the 12% rate is applied to the entire income, and the tax amount will be PLN 12,000, reduced by a discount of PLN 3,600.

2. Calculation for self-employed persons and entrepreneurs

Self-employed persons can choose between a progressive rate or a fixed linear tax of 19%. The linear tax is advantageous for those with high incomes, as it avoids the progressive rate of 32%. The choice of taxation regime must be made before the start of the tax year.

How to file a personal income tax return?

To report personal income tax, you must file an annual tax return (PIT) through the e-Deklaracje electronic system or in paper form. The filing process includes the following steps:

1. Gathering income information – if you are an employee, your employer will provide you with a PIT-11 form indicating all income and taxes withheld.
2. Filling out the declaration – all sources of income, available benefits and discounts are indicated.
3. Submission of the declaration – the PIT declaration must be submitted by the end of April of the year following the reporting year.

The online system e-Deklaracje greatly simplifies the process by automatically checking the correctness of the data.

Tax deductions and benefits

There are several types of tax benefits in Poland that allow you to reduce the total amount of personal income tax:

1. Child tax credit – a tax deduction available to parents with minor children.
2. Deductions for charitable contributions – some charitable donations can reduce the tax base.
3. Training and development expenses – professional development or training courses can be partially covered by a tax reduction.
4. Health insurance discounts – health insurance costs can be taken into account as a tax deduction.

When filling out a tax return in e-Deklaracje, you can select the appropriate benefits and obtain information on the permissible limits for such deductions.

Liability for late payment of tax

Fines may be imposed for late payment or non-payment of personal income tax in Poland. The tax authorities have the right to demand payment of a penalty, which is accrued for each day of delay. Therefore, it is recommended that you closely monitor the payment deadlines and submit your tax return in advance.

Tips for foreigners

Foreigners working in Poland are also obliged to pay personal income tax if their income is received in the country. Poland has double taxation treaties with many countries. This means that taxes paid in Poland can be taken into account in the country of residence, if the tax system allows it.

Everyone is obliged to calculate and pay personal income tax, including foreigners working in Poland

Calculation and payment of personal income tax in Poland is an important obligation for everyone who earns income in the country. The system has clear rates and allows you to reduce the tax burden through available benefits. For foreigners, knowledge of the basic rules and access to the electronic reporting system make the tax payment process much easier.