Every year, each of us faces an unavoidable obligation – to settle our incomes in accordance with Polish tax law. This also affects foreigners. If you want to fulfill your tax obligation, you must do so on the correct tax return (PIT) form. We explain each form for all types of non-business incomes. Remembering all of them at once can be difficult, so it’s worth coming back here sometimes.
PITs – which one will be right for you?
PIT-37: The one that will appear on its own.
It is the most common tax return filed in typical cases. Refers to incomes from employment, retirement, pensions, benefits and the like. Foreigners earning such incomes in Poland, are also required to settle on the PIT-37 form, but…
From 15th February , look at the application “Twoj e-PIT“ to find your PIT-37 there! These declarations are settled for us by the tax authorities. However, it’s worth making sure that everything has been settled correctly. Check also if are included any reliefs that you are entitled to.
There is time until 30th April to file all types of tax returns. In the case of PIT-37, this is therefore the time to review the declaration provided, complete and accept it.
However, you should remember that there are incomes that the tax authorities have no knowledge of and will not settle them for you. In this case, we have to take care of the matter ourselves and file the PIT. The deadline also applies to them.
What kind of incomes are involved?
FOREIGN INCOMES (FROM OUTSIDE POLAND) (PIT-36)
Those receiving foreign incomes should determine which country is their tax residency. This issue is governed by the principle of tax residency. A person is considered a Polish tax resident if they meets at least one of the following conditions:
- has in the territory of Poland a center of personal or economic interests (center of vital interests),
- stays in Poland for more than 183 days during the year.
Then you have Polish tax residency and must declare foreign incomes and those Polish ones.
If none of the above criteria apply to you, you are subject to limited tax liability in Poland. This means that you must declare only incomes earned in Poland.
If you are a tax resident in Poland – how should you settle your foreign incomes?
You will need your foreign incomes and the amount of taxes paid or withheld. This is especially important to avoid double taxation of the same incomes.
The settlement rules for foreign incomes vary from country to country. Each country, with which Poland has an agreement for avoidance of double taxation, applies a specific settlement method. It means that there is no possibility to choose a more preferred option. The key is to use the right method, appropriate to the specific country.
PRIVATE RENTAL (PIT-28)
Private rental means a contract in which the landlord gives the object of the lease for use to the tenant. The object of the lease can be movable assets, as well as real estates.
As of 2023, the only form of taxation on private rental income is a lump sum. Taxation of rentals using the general rules is possible only in business rentals.
How to settle them?
In the case of a lump sum, the tax base is revenue, which is not reduced by any expenses.
The lump sum rental rate depends on annual revenue and is:
- 8.5% of revenue up to the amount of 100 000 PLN and
- 12.5% of revenue on the excess over 100 000 PLN.
THE SALE OF REAL ESTATE (PIT-39)
It is submitted in connection with the sale of real estate and exercise of rights related to real estate.
How to settle them?
The tax, at a fixed rate of 19%, is calculated on the basis of the income you received from the sale of these real estates or their rights. Income is the amount of sales less expenses.
Expenses include the amount of costs directly related to the sale, such as the deed, disposal ads, brokerage costs. Other expenses are confirmed costs, based on VAT invoices, for the purchase or manufacture of the property, and confirmed expenditures that have increased its value.
Housing relief
In the PIT-39 form there is the possibility of applying the so-called housing relief. It allows to reduce or even “zero” the tax. In order to apply this relief, it is necessary to declare that the money obtained from the sale of the property, within three years from the end of the year in which the property was sold, will be used for housing purposes.
Expenses that may be considered to have been incurred for housing purposes are:
- purchase of a house, apartment or land for house construction,
- construction, expansion, remodeling or renovation of own house or apartment,
- expansion, reconstruction or adaptation for residential purposes of own non-residential building.
In a situation, where the declared housing purposes are not realized, the PIT-39 return must be corrected. The declared amount of housing relief must be removed from it, and the outstanding tax must be paid, together with interest. That’s why it’s a good idea to declare only the expenses you plan. We recommend not to use the relief just to avoid paying tax, as it may not turn out to be very beneficial for us in the end.
CAPITAL GAINS, I.E. SALE OF SHARES, STOCKS, ETC., ALSO FROM TRADING IN CRYPTOCURRENCIES (PIT-38)
The PIT-38 return is intended for those who earned incomes from:
- disposal of securities,
- disposal of borrowed securities (short sale),
- disposal of derivative financial instruments and the exercise of rights arising therefrom,
- disposal of shares in companies,
- taking up shares (stocks) in companies in exchange for a contribution in kind of a form other than a company or its organized part.
In simple terms, it is income from trading at the stock market, including Forex, from dividends received, etc.
How to settle them?
Income from these sources are taxed at a fixed rate of 19%.
Income (or loss), in this case, is calculated by combining the proceeds from the sale of a particular financial instrument with the corresponding purchase costs. This means that costs are not declared on an ongoing basis, but together with the sale.
Further, this means that if you only bought stocks or shares in a given year, you don’t have to file a PIT-38 return for that year. It will be required when you sell them. However, this does not apply to dividends. Dividends should be declared at the return for the year in which they were received.
How about cryptocurrencies?
Cryptocurrencies are also declared at the PIT-38 return, but in their case it looks a little different.
The costs associated with cryptocurrency exchanges are not settled by linking them to specific revenues and waiting to be settled in the year of the cryptocurrency sale. Instead, they are declared on an ongoing basis as they are incurred. It means that a PIT-38 return must also be filed if you only bought cryptocurrencies in a given year. Of course, in subsequent years, the loss from such a year can be reconciled.
Importantly, not all cryptocurrency trading transactions are declared. Only transactions involving “real” money (FIAT) should be declared, i.e. buying and selling cryptocurrency in exchange for money. Exchange transactions from one cryptocurrency to another should not be declared.
PIT RETURNS AND TAX RELIEFS
Do you know which tax reliefs you can claim in your PIT returns? In our article about tax reliefs, you’ll find all the necessary information! You’ll learn how and when different tax reliefs can impact your savings. Be sure to check it out!
Concluding
Tax settlements can be difficult and stressful, but with the right knowledge and support you usually get through the process painlessly. This post is intended to illuminate the topic a bit and provide useful information about annual tax returns in Poland.
Remember, it’s always a good idea to get help from professionals, especially if you have a complicated tax situation or it’s still unclear to you.
Contact us. We will be happy to help you and save your unnecessary stress. As part of our service, we will do everything from start to finish, from preparing the return to submitting it to the tax office. You, if necessary, will be left to pay the tax, or even better, wait for a tax refund.
We encourage you to regularly follow news and information on regulation changes to stay informed. We will help you with that! Thank you for your time and good luck with your PIT returns this year!
