Working abroad will cease to pay off? The new taxation takes effect. Unfortunately, we have unfavorable information for all Poles working abroad. All our compatriots working abroad will lose on the ratification of the MLI convention by Poland and by limiting the abolition relief. What do we know more?
Working abroad will cease to pay off? What is going on?
According to the published amendment to the income tax laws, the abolition relief will be reduced to PLN 1360. The changes will enter into force on January 1, 2021. As a reminder, on January 1 January In 2019, a multilateral tax convention (the so-called MLI convention) applies to our country. Refers to changes in double avoidance agreements taxation between its signatories. As a result, some countries (including Poland) have switched from settling foreign income using the exclusion with progression method to the proportional deduction method, which is less favorable for the average taxpayer.
Less abolition relief in practice ...
According to the report published on September 16 this year. the draft amendment to the income tax acts, the abolition relief will be limited from the 1st January 2021 up to PLN 1360. In practice, this means that we will be able to benefit from it up to PLN 8. We will have to pay tax to the Polish Tax Office on the surplus amount, which we could have avoided so far.
Which countries are affected by the changes?
Changes will affect Poles living there in countries that have successively switched to the proportional settlement method. And so Poles earning money in Austria and Slovenia will be the first to go. In next year's settlement (for 2020), the change will also apply to people earning w Great Britain, Japan, Ireland, Lithuania, Israel, Finland, Slovakia or New Zealand. In two years, new taxation will apply to Poles working in Belgium, Denmark, Norway, Portugal and Canada. Reducing the abolition relief will also result in differences in the method of taxation depending on workplaces. For example, people working in Spain, Germany or France will still be able to use the exclusion with progression method. However, employees in Belgium, the Netherlands or Britain must pass for the new tax and pay the additional amount.
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