Tax residence - important explanations from the Ministry of Finance

Tax residence - important explanations from the Ministry of Finance

Tax residence - important explanations from the Ministry of Finance
The Ministry of Finance has published explanations on the rules of establishing tax residency in Poland for natural persons. The explanations address, in particular, the criteria for establishing tax residency and the manner of calculating the length of residency for natural persons. Undoubtedly, the explanations will provide a starting point for analysis of the natural persons` tax situation.

Types of tax liability

It should be recalled that in accordance with the general rules, natural persons residing in Poland are obliged to pay tax on their total income regardless of the place of its generation - the principle of unlimited tax liability. On the other hand, natural persons not residing within the territory of Poland are subject to tax obligation only on income earned in Poland - the principle of limited tax liability.

The above rules determine the method of settling income earned by natural persons, but they are not the only criterion, as one should take into account, inter alia, the number of days of their stay in Poland, possible changes during the year and issues related to establishing the so-called centre of personal or economic interests.

Days of taxpayer's residence in Poland - how to count?

Generally, to be considered resident in Poland for tax purposes, a person must exceed 183 days of residence in Poland in any calendar year. It has been clarified in the explanations that when counting the days of residence of a natural person in Poland, one should take into account the days of being physically present, i.e., each part of a separate day spent in Poland is counted as one day of residence.

These explanations also confirm that the so-called broken tax residency is possible, which means that a taxpayer is considered to be a tax resident in Poland only for a part of the tax year, if certain prerequisites are met.

Centre of life interests

If a given individual does not meet the above criterion of residence, then his/her connections with Poland should be assessed according to the so-called centre of life interests - centre of economic interests or centre of personal interests.

The centre of economic interest is the place with which a person has close economic ties - the place of carrying out gainful activity, the place of main sources of income, the place of investments, immovable and movable property, loans taken, bank accounts, and the place from which the person manages the property.

The centre of personal interests, on the other hand, is the place with which a person has close personal ties, which are defined as the existence of family, social, social, cultural, sporting or political ties, as well as the presence in Poland of the person's spouse, partner or minor children.

Explanations with the value of tax interpretation

It is worth noting that the principles presented in the explanations are illustrated with practical examples to help taxpayers understand the complicated rules of establishing tax residency, as well as the links of the Polish tax regulations with the regulations of international double taxation treaties.

What is important, the explanations were issued on the basis of art. 14a § 1 item 2 of the Tax Ordinance, so if a taxpayer follows these explanations, he/she is covered by the protection provided for individual tax interpretations.

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Agata Nieżychowska
Agata Nieżychowska
Tax Director