Poland Global Payroll & Tax Information Guide
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Ease of Doing Business in Poland: An Overview
Poland is ranked second in Europe and tenth in the world when it comes to the complexity of doing business, according to the latest edition of a ranking that analyses rules and requirements in 77 countries around the world.
The country has risen 24 places since last year in the Global Business Complexity Index (GBCI). The report’s authors cite confusion over fast-changing legislation as a result of the coronavirus pandemic, the need for official translations, and problems with digitization.
However, Poland ranked fifth globally in terms of the value of greenfield projects – meaning completely new foreign investments – announced last year, according to a new report by the United Nations Conference on Trade and Development (UNCTAD).
Payroll in Poland – 2021 Updates
Poland has introduced a new stimulus plan designed to bolster the economy following the COVID-19 pandemic.
According to KPMG the proposed program includes:
- An increase to income for the “tax-free allowance” for low-wage earners.
- An increase to the threshold that triggers for individual taxpayers, application of the higher income tax bracket of 32% to PLN 120,000 (currently PLN 85,528).
- An increase to the total tax and contribution burden for non-deductible health insurance contributions.
- The “return relief” is to encourage employees and entrepreneurs who have settled abroad, to return to Poland. Individuals coming back to Poland would pay half of their individual income tax due within 2 years of their return.
- A new relief related to automation and extension of the existing research and development and intellectual property relief schemes.
- To extend the tax relief regarding Estonian corporate income taxpayers and tax relief to reduce the costs of entering the stock exchange.
- VAT relief – eliminating VAT on settlements within capital groups and introducing the possibility of selecting VAT settlement method for financial transactions.
See all the COVID-19 measures and temporary limitations in Poland here.
Basic Facts about Payroll in Poland
Poland currency, the PLN, is worth 0.25 USD, and the average monthly salary is 7,560 PLN, or $1,915, according to the exchange rates in October 2021. The country is a member of the European Union and is therefore subject to applicable trade agreements and economic regulations.
The corporate tax is 19% and the sales tax is 23%.
Social Security is financed through a dedicated payroll tax. Employers and employees each pay 6.2% of wages up to the taxable maximum of $142,800 (in 2021), while the self-employed pay 12.4%.
Salaries are paid on monthly basis and employees must receive their salary no later the 10th of the following month. There is no legal requirement for 13th-month payments.
A company is resident if either its legal seat or its place of management is located in Poland. Resident companies are taxed on their worldwide income.
Non-resident companies are taxed only on their Polish source income.
The most important cost consideration for employers in Poland is the nature of social security contributions. These contributions can range from 19.48-22.14% of an employee’s gross earnings.
After that, employers may come to payment frequency terms directly with their employees. It is legal in Poland to pay your employees daily, weekly, monthly, or even quarterly. Employers withhold an employee’s income and social security taxes from each paycheck, regardless of frequency.
*The 32% tax rate only applies to annual income above 85,528 PLN. For example, an employee that makes 125,000 PLN a year pays 17% on 85,528 PLN and 32% on the remaining 39,472. Further, an employer deducts these taxes only at the time of year that the employee exceeds 85,528 PLN. Polish employees’ net pay shrinks at the latter part of the year once they’ve reached the 32% tax bracket.
Social security contributions are obligatory and payable by employers. They are financed by both employers and employees. Employers must deduct the appropriate amount from the employees’ salaries and pay the contributions to the social security office by the 15th day of the following month.
Compensation and Benefits
There is a decent amount of leeway for employees that agree to work for their employer a large number of hours during a workweek. Polish labor law does set a minimum wage, as well as overtime and minimum paid leave.
For more information about how our Global Payroll Control Platform integrates with local payroll providers in Poland, contact us today
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Using Payslip, we can manage all our payrolls across nine in-country vendors on one platform. When the global Covid-19 pandemic arose, it was not an issue from a payroll perspective, and critically getting everyone paid. The Payslip platform enabled continuity for our international payroll service including the fast and seamless implementation of the Payslip Employment Self Service during this time.
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