Rental income from residential property in Poland is subject to tax, regardless of whether the owner is resident in Poland or not. Owners of rental properties in Poland, who are in receipt of rental income, must declare this income by submitting a tax return to the Polish tax authorities each year.
Under Polish tax legislation, anyone earning rental income in Poland is required to make monthly calculations and payments to the tax office by the 20th of the month following the month in which rent was received. Under the progressive scale method, monthly payments are calculated on the rents received for the month less relevant expenses incurred.
Once the cumulative net amounts reach the tax-free allowance for the year (PLN 3,091) the monthly net amount is multiplied by the applicable tax rate and tax payments are made on this basis.
At year-end, the annual tax return is submitted and the final tax position is determined. This may result in a refund being issued or a final balancing payment needing to be made depending on the payments on account made throughout the year.
Tax Identification Number
Non-residents in Poland, who are liable to pay certain taxes, must apply for a Polish tax identification number (Numer Identyfikacji Podatkowej). Foreigners who are considered residents for tax purposes in Poland need to apply for a card of temporary residence.
The rate of income tax is calculated using one of two tax methods:
1. Progressive scaled rates 18%-32% on rental profits after costs.
2. Fixed rate of 8.5% on gross rental income, with no deductions for costs.
Local Polish Property Tax
Local Polish Property taxes (rates) are also payable quarterly and vary per location. Rates range between 0.33 PLN – 0.68PLN per sq. mtr (circ €0.09 - €0.17/sq.mtr).
Polish Capital Gains Tax
Polish CGT is charged at a rate of 19% of the gain after costs (effective for properties purchased after January 1st 2007). Properties that have been owned for more than five years are exempt from Polish CGT.
UK & Irish residents
If you are resident in the UK or Ireland you will have to report any income received in Poland on your annual resident tax return (i.e. your Irish or UK tax return). There are double taxation agreements between Poland and Ireland and Poland and the UK so double taxation will not usually apply. Your PTI Account Manager can provide further information on double taxation relief or filing your resident tax return.