Last Updated on February 20, 2024 by Kristina Valcheva
Poland has become an increasingly popular destination for foreign property investors in recent years, thanks to its stable economy, attractive real estate prices, and growing rental market.
If you’re an expat who is considering an investment in Polish property, it’s essential to understand the income tax in Poland for foreigners which can be complex and differ from other countries.
In this article, we will provide a comprehensive overview of the real estate tax in Poland, covering the various taxes and fees that property owners need to be aware of. By the end of this guide, you will have a comprehensive understanding of personal income tax in Poland, allowing you to make informed decisions when investing in Polish property.
Income tax in Poland for foreigners who own property
Every foreigner who receives rental income in Poland is obliged to report it to the government by filing a Polish income tax return and paying personal income tax (PIT).
Before the recent changes, some landlords earned under a tax-free threshold and didn’t have to pay any income tax. This is not possible anymore.
The deadline to file an income tax return in Poland and make payment is the 20th of the month after the relevant quarter. For instance, the tax amount that is owed for the initial quarter needs to be settled by 20 April 2023.
If you miss the payment deadline, you will be subject to fines and penalties.
Our tax experts can help you estimate the tax due during the tax year and file your income tax returns so you don’t have to worry about tax paperwork anymore.
Income tax rates in Poland
For rental income of up to 100,000 PLN, the tax rate is 8.5%, while for income exceeding 100,000 PLN, it is 12.5%.
Previously, under the progressive scale system, income tax rates varied between 17% and 32%.
It is no longer possible to deduct any expenses, unlike before 2023 when all relevant expenses were deductible. (e.g. maintenance costs, utilities).
Read also:
What does the Polish Deal (New Polish Order) mean for non-resident property owners?
Polish property tax
If you’re a property owner in Poland, it’s important to know that your property must be registered for property tax.
You have the option to pay in one lump sum or divide it into four installments due on the 15th of March, May, September, and November. Plus, you’ll only be charged for the time period in which you own the property.
Property taxes are grouped by city or town, so if you’re a savvy investor and own multiple properties in one city, you may be able to combine your payments into one. However, this may vary depending on the location, so make sure to do your research.
In Poland, property owners may also be required to pay a “Perpetual Usufruct” fee to the government. It is based on who owns the property as of January 1st and must be paid in full by March 31st of the same year. It may sound like a lot to keep track of but don’t worry – with a little know-how, you’ll be a pro in no time!
Polish personal tax number – NIP
In Poland, every business entity, including sole entrepreneurs, must obtain a tax identification number (known as “Numer Identyfikacji Podatkowej” or NIP) from a nearby Tax Office to conduct business legally. Furthermore, those who are liable for value-added tax (VAT) must fulfill an additional registration obligation.
Property Sales Tax in Poland
In Poland, there is no tax on property sales. However, sellers are required to pay notary fees when selling a property, which are usually covered by the buyer unless otherwise agreed. If the seller has owned the property for less than five years, they are required to file a property sales tax return (PIT-39) upon selling the property.
Capital Gains Tax in Poland
Capital gains tax (CGT) is a tax on the profit earned from selling an asset, such as property, stocks, or investments. The tax is paid on the difference between the purchase price of the asset and the selling price.
The capital gains tax in Poland is 19% and is paid if a property is sold within 5 years from the purchase date. However, it can be avoided if the property is sold after 5 years of ownership or if the net income is spent on “property purposes” within 2 years of selling the property.
Property purposes refer to things such as purchasing an apartment, house, or land, paying off the mortgage, or converting non-residential property into residential property.
The tax declaration PIT-39 has to be submitted to the tax office after the property sale, even if the money is going to be reinvested and there would be no tax to pay.
If it is not reinvested within 2 years, then the tax declaration has to be corrected and submitted to the tax office.
The deadline for submission is 30 April in the following year after the property was sold, but it doesn’t need to be submitted at all if the property was owned for more than 5 years.
Purchase Taxes in Poland
If someone purchases a property in Poland on the secondary market, they are required to pay a 2% purchase tax as well as notary fees. However, if the property is bought on the primary market, there is no purchase tax to be paid, although VAT may apply to such purchases.
In the context of the real estate tax in Poland, the primary market refers to the sale of newly built or off-plan properties by developers or builders. The secondary market, on the other hand, refers to the sale of properties that have already been previously owned and occupied.
Who are we and how we can help you
Looking for help with managing your property in Poland while navigating complex tax obligations as a non-resident landlord? We know that Polish property tax can be confusing but PTI Returns (Property Tax International) has got you covered.
Our team of experienced tax experts specializes in filing annual income tax returns in Poland to ensure that you remain compliant with tax authorities.
PTI Returns is part of the Irish company CluneTech. With over 25 years of experience in international tax, we offer a more affordable and convenient service compared to local accountants.
Our expertise in international property tax enables us to determine residency status and apply for tax relief, while our global presence and local knowledge allow us to maximize your investment profit potential.
Our online one-stop shop makes filing tax documents in multiple jurisdictions a breeze.
Contact PTI Returns today for a free, no-obligation consultation with our tax experts. Let us take care of the paperwork while you focus on your property.