How can an Umbrella Company Help with Contracting in Poland?
Most freelance workers aren’t superheroes who successfully tackle these issues all on their own. There are companies who specialise in helping workers make the most out of their contracts.
They’re called Umbrella Companies (or, contractor management companies).
Basically, an Umbrella Company acts as your full-time employer, even though you maintain your independence as a contractor. They collect and filter payments from your clients, filtering out the necessary social security and fees. You send them your timesheets, and they send you payments.
Because they act as your “employer,’ they can sponsor you and provide a single work permit for multiple contracts in Poland. Even better, most are experts in Polish and expat tax law, meaning they’ll also help you optimise your earnings in Poland.
Although the Umbrella Company is technically your “employer,” you’re essentially freeing yourself to work even more independently. You still dictate your contracts, your hours, your schedule. The Umbrella Company simply filters out the time-consuming admin and immigration issues, allowing you to focus on your new contract.
Can I Organise My Taxes and Work Permit Myself?
Generally, you need to have an employer sponsor in order to secure the appropriate work permit and work visa for Poland.
If you’re working independently, it can be difficult to find clients willing to sponsor you. Moreover, even if your client can do this, you’ll need a new sponsor each time you decide to take on a new contract. Of course, every new sponsor will mean more paperwork.
Also, are you familiar with the intricacies of the tax system in Poland, as well as your own country’s laws on overseas earnings? If so, good on you!
However, if you’re like the rest of us, figuring out (much less reducing) your tax liability in Poland and your home country can seem like full-time work in itself.
A Contractor’s Guide to Taxes in Poland
One of the most consistently challenging aspects of contracting in Poland is complying with the country’s tax system. As well as paying tax in Poland, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.
How do I calculate my taxable income in Poland
If you’re working in Poland under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Poland for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Poland, but contractors may not be offered this service because of their short stay with each employer.
Anybody who can’t pay their tax in Poland through PAYE is left with the prospect doing everything themselves.
Do you know much about Polish Tax Law? Does Poland have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in Poland can range from 18 to 32 percent, and you need to be sure you are placed in the correct tax brackets.
Tax Filing as a Contractor in Poland
| When Do You Need to Lodge Your Tax Return? | 30 April |
| Tax Filing Deadline | 30 April |
| Can you file it online? | Yes, https://www.finanse.mf.gov.pl/web/wp/pp/e-deklaracje provides a link to e-Deklaracje and pre-filled tax forms. |
How to File Taxes in Poland as a Contractor
Step 1: Prepare Documents
Collect a PIT-11 form from your employer before 28 February.
Step 2: Fill a PIT-37 Form
Employees in Poland are generally required to fill out a PIT-37 form, using details on your PIT-11 form. You can do this via e-Deklaracje(link is external), an official program provided by the Ministry of Finance, or use pre-filled tax return forms here(link is external).
Pre-filled tax return forms are easier, but are not available until March.
For a comprehensive step-by-step guide (with English translations) on how to use the 2 programs, click the links below:
https://www.justaskpoland.com/pit-english-pit-37-e-deklaracje-program/(link is external)
https://www.justaskpoland.com/pre-filled-tax-return-poland/(link is external)
Before using pre-filled tax return forms, you must register here(link is external).
Step 3: Submit Forms by 30 April
Forms should be submitted to the office designated for the area that you lived in until the last day (31 December) of the previous tax year.
You may submit online or in person at the designated office. It is recommended that you go to the office if you expect to receive a tax refund. If you have received tax refunds previously, the tax office should have your bank account details in their database.
If this is your first time receiving a tax refund and you have a PESEL, you need to fill out a ZAP-3 form which can be found here(link is external) or at the tax office.
Upon entering Poland, you may have applied for a NIP (numer identyfikacji podatkowej). If you filled out section D1 of the NIP-7 form which required your bank account number, you may submit your forms online. If not, you need to fill out a NIP-7 form at the tax office, providing your bank account details.
When will you receive your refund?
A refund will be paid to you within 90 days, in March or April.
Tax Figures in Poland
| Currency | Poland Zloty (PLN) | ||||||
| Tax-free Threshold in Poland | None | ||||||
| Income Tax Rates |
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|---|---|---|---|---|---|---|---|
| Notes | PAYE instalments: Tax is withheld monthly as advance payments for personal income tax. A final calculation of an individual’s annual tax liability is made at the time of preparing the tax return. Depending on the final calculation, the individual may ne required to pay some additional tax, or may be entitled to a tax refund (if advance payments exceed the final tax liability). Residents and non-residents working under an employment contract with a Polish employer, are subject to withholding tax. The tax withheld by the employer is paid to the tax office by the 20th of the month following the month in which the tax was withheld. Joint Taxation: Married taxpayers may file jointly. This is cost-effective if their incomes fall under different tax bands. Income is calculated separately, applying their respective tax concessions. Their joint income is divided by 2, and tax is calculated for each spouse. For this to apply, both individuals must reside in Poland for at least 183 days in the given year, they must have a common marital estate and be married for the entire year for which the PIT form is filled. Deductible cost of earning income: Taxpayers are entitled to a deductible cost of earning income at PLN111.25 per month. |
Tax Residency in Poland
When do you become a tax resident in Poland
You become a tax resident in Poland when:
- Poland is your centre of vital interests i.e. you have closer personal or economic relations with Poland; or
- You stay in Poland for more than 183 days in a fiscal year. This is counted over the course of the whole year and includes days before the start date for any assignments.
Does the 183 day rule apply in Poland
Yes
Am I taxed on my global income in Poland
Yes, if you are a resident.
Non-residents are only taxed on Polish-sourced income.
Can you set up your own Limited Company in Poland?
| How long does it take to set up | 5 days |
| How much does it cost | PLN1,670 + 0.4% of share capital over PLN60,000 + civil law transactions tax* i.e. [share capital – (notary fee + 23% VAT) + court fees] x 0.5% |
| Is it easy? | Starting a Business Rank: 120/190 (Source: World Bank) |
Tax Calculator in Poland
If you are a contractor and want a calculation on your tax and net retention in Poland, we can supply it to you free of charge.
Using an Umbrella Company for Income Tax in Poland
Contractors in Poland are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Polish umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).
The companies are experts in Polish taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Polish tax office or tax department directly including processing your tax refund if you are eligible.
How We Can Help You with Tax in Poland
We work with numerous umbrella companies in Poland, many of whom are experts in tax and immigration laws. If you have any questions about tax in Poland, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Polish work permit.
Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Poland but without the overhead of directly dealing with the Polish tax authorities. Get in touch with us today for some reliable advice on tax in Poland!
A Contractor’s Guide to Work Permits in Poland
Immigration is one of the primary concerns for any contractor hoping to start working in Poland. Permanent employees will find it easy to get their Polish work permit because they’ll receive “sponsorship” for their entire stay from their prospective employer.
The Polish work permit, known more commonly as the D-Type Visa, is dependent on this sponsorship because it confirms that you’ll be earning money during your stay in the country. Contracting in Poland is more difficult because the work permit is tied to one employer, so you have to change it to suit each new contract. Thankfully, umbrella companies provide a convenient and effective solution to this issue.
Switch Business Visa to Work Permit?
As your permanent employer, umbrella companies are able to sponsor you for your Polish Visa provided they’re on the register of approved sponsors. Many different companies offer this service, because it makes contracting in Poland infinitely simpler and saves you the hassle of continuous paperwork. Instead of changing your work permit every time you get a new contract, you can just work how you ordinarily would under the same permit. They protect you from the bureaucratic “rain” of legal compliance with the Polish immigration authorities. They can even deal with the Polish Embassy directly.
Through their service you may be able to use a business visa to get started quickly and then transition to a work visa in Poland. It depends on your specific visa requirements. Be aware you may have to register for a residence permit in Poland.
How Does an Umbrella Company Work?
Most people want to do their work, earn their money and enjoy their spare time without taking on loads of admin in a new country. That is why an umbrella company can help.
When you’re working through an Umbrella Company, you’ll essentially be outsourcing the admin and tax issues to specialists.
While the umbrella company will charge a fee, you’ll likely end up saving more money in the long run: you’ll be able to focus on your work, expertly reduce your tax liability, and comply with all laws and regulations in Poland (which means avoiding fees, fines, or even worse penalties).
How Can We Help You?
There’s a huge variety of Umbrella Companies with different specialities and advantages in Poland. How do you find the right one for your circumstances?
We work closely with Umbrella Companies all throughout Poland and match contractors with the right company for them. If you’ve already secured a contract in Poland, we can help you find your best match (for free). Or, we can simply give you feedback on your situation (for free).
