Personal Income Tax, abbreviated as PIT, is one of the primary taxes applicable in Poland. It pertains to incomes earned by individuals, i.e., revenues reduced by the costs of obtaining them and previously paid installments.
Refugees from Ukraine working in Poland also have to pay PIT if their earned income exceeds the tax-free amount. In this article, we will try to explain what PIT is, how and when to submit it, and who is exempted from it.
What is PIT?
PIT is a tax on income collected by the State Treasury. Individuals earning an income in Poland above the tax-free amount are obligated to pay income tax annually. Currently, the tax-free amount in Poland is 30,000 PLN per year (as of 2023).
The PIT is progressive, which means the higher the income, the higher the tax rate. The tax rate for 2022 is:
- 12% on incomes not exceeding 120,000 PLN annually,
- 32% on incomes above 120,000 PLN annually.
What is needed?
To settle income tax in Poland by submitting a PIT-37 tax return, you should have at least the following documents and information:
- PESEL number – applies to those not running their own business and not being active VAT taxpayers, e.g., those employed under an employment or mandate contract. You can find the application form for it [here].
- Tax Identification Number (NIP) – necessary for those conducting business in Poland. To obtain a NIP, you must submit a NIP-7 declaration to the tax office appropriate for your place of residence.
- Income information – documents related to earned income (salaries, business income, investments, property rentals, donations, etc.). For those working under a contract or employment agreement, this will be PIT-11 provided by the employer (see below). Information about income from other forms of work can be found [here].
- Deduction information – tax deductions and reliefs, e.g., child reliefs or family benefits, which can reduce the tax.
- Bank account – to which any overpaid tax will be refunded.
People who worked in Poland based on an employment or mandate contract should receive a PIT-11 form from their employer with information about incomes and tax advances collected. In this form, the employer specifies:
- The amount the employee earned during the year.
- How much of that amount was paid in taxes.
- The net salary (take-home pay) the employee received. Employers are obligated to prepare a PIT-11 report and submit it electronically to the tax office by January 31st. Employees, on the other hand, must receive this form from their employer by February 28th. Based on it, they can fill out the PIT-37 tax return.
You can read [here] about what to do if the employer does not provide documents confirming your earnings.
How to submit a PIT-37 tax return?
Anyone who earned income in Poland, within the first three months after the end of the tax year – in 2023 by May 2nd at the latest – must submit a PIT-37 tax return. In the tax return, you should include all income earned during the tax year, as well as any tax reliefs.
To settle PIT tax, you must first determine your income and the costs of obtaining it. Revenues include both wages and other sources of income. The costs of obtaining income are expenses related to earning income, such as documented travel expenses to work or attended training. You can also deduct charitable expenses and specific legal reliefs.
After determining income and costs, you can use the PIT forms available online. These forms allow you to calculate the due PIT tax and determine who is its payer. It’s worth noting that, for marriages, the PIT tax is calculated jointly.
Where to submit PIT-37?
The PIT-37 form can be submitted in several ways:
- Electronically – through e-Declaration or using the Your e-PIT service.
- In paper form – personally at the appropriate tax office branch or by post (with a receipt confirmation), with the shipment taking place before May 2, 2023.
PIT Tax Exemptions
Exempted from the obligation to submit PIT tax returns are not only those who earned an income in Poland below the tax-free amount, but also:
- Individuals receiving benefits from the Polish social insurance system, such as sickness, maternity, or care benefits, or from the social assistance system.
- Individuals who earn income from sources other than paid work, but their total annual income does not exceed the tax-free amount.
- Individuals receiving pensions or retirements from abroad, if Poland has a double taxation avoidance agreement with that country.
Exemption from PIT tax does not mean that one does not have to pay other taxes or fees, such as social or health insurance contributions.
How to get help? Charitable organizations also provide support in tax matters. Assistance in submitting the PIT declaration is offered by, among others:
Clearing up any doubts is crucial as submitting a PIT declaration is not a right but an obligation for tax residents in Poland. Non-compliance can result in financial consequences.