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Expatriates in Poland face difficulties with their tax payments as tax authorities tend to interpret the law strictly. They often challenge companies’ personal income tax (PIT) paid on behalf of expatriates, and sometimes even refund past PIT payments.
Typically, expatriates remain under their home country’s contracts and must navigate the Polish tax system without a local employer. Employers usually assist them by transferring funds to an employee’s micro-account, acting as “technical substitutes” rather than formal remitters.
Recently some tax offices have equated payments made by another entity with a payment of tax in the taxpayer’s name, rejecting payments from non-taxpayer accounts given the PLN 1,000 statutory cap on third-party payments. This broad interpretation constrains taxpayers’ ability to act in their best interests.
Tax payments made by third parties have been addressed in numerous administrative court rulings. Legal precedents confirm that Article 62b § 1 point 3 of the Tax Code governs the transfer of obligations (debt arising from the duty to pay), which is not allowed for tax liabilities. Courts have also noted that having another person handle the tax payment is merely a practical operation that no tax law prohibits (the Supreme Administrative Court ruling of April 14, 2021, case no. II FSK 3305/18). Therefore, the provision cited by tax authorities does not apply to situations where the technical operation of depositing funds is carried out by an entity other than the taxpayer, such as an intermediary or proxy.
The tax authorities’ stricter approach to questioning companies’ taxes paid on behalf of employees seems impractical, especially for short-term assignments that create tax obligations in Poland (e.g., employees staying here for just a few weeks). Such actions cause unnecessary complications, which do not benefit employees, employers, or the State Treasury in the long run. They may hinder tax compliance in Poland and encourage a “black economy” attitude with effective taxation of such income being avoided.
Moreover, discussions about a slight rise in the current PLN 1,000 cap seem out of touch with the economic reality, where tax payments on behalf of high-level expatriates often reach hundreds of thousands of PLN. Thus, the tax authorities’ rigid approach is unlikely to produce the desired benefits and will only make administrative duties pile up—both for companies supporting their expatriates in Poland for specific business purposes and for the employees themselves, who will face additional administrative tasks to fulfil.
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Summary
Companies and groups seconding individuals to Poland need to take into account the change of approach and design alternative models/ processes. EY Poland is ready to provide support through discussions on the options available in Poland, to help companies stay compliant and ensure that expats can concentrate on their tasks and that processes flow smoothly.