Applies to those Ukrainians who receive income based on labor relations; the position regarding FOPs is currently unknown.
Recently, the Polish Ministry of Finance gave a comment to the Polish media money.pl regarding the taxation of the incomes of Ukrainians: “incomes of Ukrainians from Ukrainian employers should be taxed in Poland, if the Ukrainian stays in Poland for more than 183 days”. In this case, incomes received before reaching 183 days are also taxed. The full text of the commentary is in possession of BRDO.
Why is this important?
As of August 2022, more than 1,320,000 Ukrainians received a PESEL in Poland (tax number indicating temporary protection). Some of them continue to work for Ukrainian employers and pay taxes in Ukraine.
What is the position of the Polish Ministry of Finance?
A few days ago, the Ministry of Finance of Poland published a statement that creates problems for the Ukrainian budget and Ukrainians who continue to work remotely from Poland under Ukrainian contracts.
Thus, the Ministry of Finance of Poland, at the request of the Polish media, stated: “According to Article 15 of the Polish-Ukrainian Agreement on the Avoidance of Double Taxation, if a Ukrainian tax resident performs paid work on the territory of Poland and his remuneration is paid by a Ukrainian employer who does not have a permanent establishment or permanent job in Poland, he is obliged to pay tax in Poland if his stay exceeds 183 days in a calendar year. In such a situation, all his income related to the performance of work on the territory of Poland is subject to taxation in Poland, that is, also income received before exceeding the threshold of 183 days of stay on the territory of Poland.”
Similar conclusions are also published on the website podatki.gov.pl
What information was available before?
In July 2022, BRDO released the news that Ukrainians working remotely from Poland have a chance to continue paying taxes only in Ukraine. The basis for the news was the publicised letter of the Ministry of Finance of Poland, which BRDO received in response to the advocacy campaign for the preservation of taxes of Ukrainians, which began in May 2022.
We quote from the letter received from the Polish Ministry of Finance:
1. “As for Ukrainian residents in Poland, I want to assure you of the very flexible and individual approach of the Polish tax authorities. In general, as a rule, we do not deny the possibility of preserving the centre of vital interests in Ukraine during wartime.”
BRDO’s comment: The determination of a person’s centre of life interests has a significant impact on where he or she pays taxes.
2. “Taking into account the special needs of Ukrainian taxpayers, we have introduced a special regime for citizens of Ukraine, which allows them, at their wish, to choose taxation as if they were tax residents of Poland. This special regime is voluntary and available only in the period from February 24, 2022 to December 31, 2022 for citizens of Ukraine who are subject to the Law of March 12, 2022 on assistance to citizens of Ukraine in connection with the armed conflict on the territory of this state. Citizens of Ukraine can freely choose this special regime in order to be taxed on more favourable terms than under the general rules.”
When publishing this message, we emphasized that it does not have the status of a regulatory act, but at the same time we interpreted it as a positive approach.
However, as we can see, the Ministry of Finance of Poland has changed its position. The new position, published a few days ago, no longer contains information about special rules regarding the payment of taxes by Ukrainians until December 31, 2022, or about the possibility of preserving the centre of vital interests of Ukrainian refugees in Ukraine during wartime.
What should Ukrainians who work remotely from Poland do?
Given the published positions of the Ministry of Finance of Poland, we do not have a simple answer. We advise you to contact tax consultants and analyse your specific case in detail.
Separately, we emphasise that at the same time, Ukraine is taking steps to establish the exchange of information on financial accounts with foreign bodies.
What should be done to save tax revenues of Ukraine?
Advocacy regarding the application of the provisions of the Conventions on the Avoidance of Double Taxation in favour of Ukraine must be brought to a positive result. Various representatives of the authorities previously announced the corresponding work on preserving the tax revenues of Ukrainians who left after the war. BRDO will also continue to make efforts in this direction, because this issue is relevant not only for Poland.
Disclaimer: Please note that these materials are not legal acts. Determining the place and order of tax payment is a complex legal issue that may require the consultation of specialists or official bodies.