Doing business in Poland: Taxation and Payroll

Tax Figures

Corporate Tax Requirements

Corporate income is taxed at 19%.

Income Tax Rates

Poland utilises a progressive income tax system. Residents are taxed on their worldwide income if they have lived in Poland for over 183 days, otherwise they are not.

Up to 3091 PLN: 0%
3,091-85,528 PLN: 18%
Over 85,528 PLN: 32%

Time to prepare and Pay Taxes

271 hours

Employers Social Security and statutory contributions

Pensions: Employer contributes 9.76% of salary
Medical Insurance: Employer does not contribute
Invalidity Pension: Employer contributes 6.5%
Accident Insurance: Employer contributes between 0.67% and 3.85%
Health Insurance: Employer does not contribute
Labour Fund: Employer does not contribute

Employees Social Security and statutory contributions

Pensions: Employee contributes an additional 9.76%
Medical Insurance: Employee contributes 2.45%
Invalidity Pension: Employee contributes 1.5%
Accident Insurance: Employee does not contribute
Health Insurance: Employee contributes 9% of salary
Labour Fund: Employee contributes 3.45%

Payroll

Poland is largely still undertaking the modernisation of its electronic payment systems, which makes payment to foreign employees complex at times as many employers continue to pay in cash. While there is no payroll tax in Poland, foreign companies are required to comply with Polish tax laws, primarily in regards to individual income tax, social security, withholding tax, and sales tax.

Remote Payroll

A remote payroll in Poland is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Poland. One of the options available for a non-resident company to payroll its employees (local and foreign) in Poland is to use a fully outsourced service like a GEO or FESCO which will employ and payroll the staff on their behalf.

Local Payroll Administration

Most employers in Poland utilise the country’s electronic clearing system, ELIXIR, to submit employee payments, while many others still pay in cash. In order to use ELIXIR, the employer needs to have a Polish bank account and a local signatory with the authority to represent the company.

Unlike many other countries, personal income tax deductions collected through payroll in Poland are the same for all employees, rather than a ‘pay as you go’ model.

Internal Payroll

Larger companies with a commitment to Poland may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff. There will be a need for in-country human resources personnel who have the background needed to manage a Polish payroll, and can fulfill all tax, withholding, and payroll requirements.

This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Polish employment laws.

Setting up payroll in Poland

Currency

The Polish currency is the Polish złoty (PLN) with 1 PLN equivalent to approximately 0.25USD.

Employee Information Required

When taking on a new employee, employers need to know a range of information about the individual they are taking on. This information will allow the employer to know more about the employee them self and be able to send them information via post and their salary to their bank account.

Employee information:

Name/ Date of Birth
Address and Telephone
Postal address
Pension details
NIP Number
Qualifications

These are just some of the basic details in which are required for employers

Tax Registration Requirements

Polish employers must be registered in KRS (National Court Register) or CEIDG (Central Register and Polish employers must be registered in KRS (National Court Register) or CEIDG (Central Register and Information on Business Activity).

KRS and CEIDG are responsible for sending adequate application forms to the Tax Office, ZUS (Social Security Institution) and GUS (Statistical Office).

Every time when employing new person, employer is obliged to register new employee in ZUS within 7 days.

Social Security Registration

FOR EMPLOYER WITH SEAT IN POLAND – official Polish registration documents are required, such as NIP, REGON, KRS.

Payers of contributions are required to prepare and provide to the Social Security Office notification of payer contribution on the appropriate materials within 7 days from: date of firm employment of employee or arising legal relationship justifying inclusion of pension insurance and/or health insurance of the first person.

In Poland, social security consists of:

Old-age pension;
Invalidity pension;
Sickness and maternity insurance;
Insurance against accidents at work and occupational diseases;
Health insurance.

Social insurance may be mandatory or voluntary. All people in active employment, that is, employees, the self-employed and farmers, are covered by mandatory insurance. Reporting these people to social insurance is the responsibility of either those who pay the contributions (employers), or, for the self-employed and clergy, of the individuals themselves.

Documentation Required for New Employees

An employment contract is concluded in writing and should be signed no later than on the day the employee starts working. If no contract is signed, then the employee should be provided with written confirmation of the contract conditions on the day he starts work at the latest.

Any changes in employment contract conditions should also be made in writing. The employer should include additional written information about certain engagement terms to the employment contract. Labour Code provisions set out the regulations that should be included in the employment contract and in the additional written information.

Types of employment contract – an employment contract can be signed:

For an indefinite term
For a fixed term
For the time it takes to complete a specific task
To replace an employee – in the event of his or her justified absence from work;
The employer can hire another worker under a fixed term employment contract for the period of absence

Payment Mode

The payment of employee salaries can be made in a range of different way in the work place. Large scale companies, which employ a number of employees, may generally opt for Electronic Payments. Electronic payments allow the employer to pay each individual their wages in a fast and accurate way, which is important when needing to make a range of payments at one time. Small employers with only a few employees may choose to pay salaries using cash.

Another way of paying salaries is to use cheques; however cheques are becoming more unpopular and are soon to be taken out of use.

Frequency of Salary Payment

Employers in Poland can choose from range of different frequencies in which to their employees salaries.

These frequencies include: