Introduction of exit tax to the Polish tax system results from an obligation to implement the Directive (UE) 2016/1164, adopted in 2016. The mentioned directive establishes provisions in order to prevent tax avoidance practices, which may have indirect impact to functioning of the internal market, so called the ATAD Directive.
A crucial assumption of the exit tax is taxation of unrealized profits in connection with moving one’s assets to another country, also those which are part of a permanent establishment.
The tax is also due in case of change of the residency status of a taxpayer, which deprives Poland from taxation of income from sale of the individual’s assets. This is not required by the ATAD Directive – the Polish law in this issue goes beyond the requirements of the ATAD Directive and implements taxation of natural persons, who change their residency.
In accordance with the provisions introduced as of 2019, the basis for taxation are unrealized capital gains earned by individuals within their business activity and individuals who are not entrepreneurs.
In case of entrepreneurs, exit tax is imposed on assets moved out of Poland. For other individuals, exit tax is due as a result of losing the Polish tax residency, when it comes to PIT taxpayers.
Thus, exit tax regulations may apply to both employees leaving Poland to work abroad, as well as foreigners assigned to work in Poland, who decide to leave Poland after the end of their assignment.
Additionally, the obligation to pay exit tax should arise only in case when an individual has the place of residence in Poland for at least 5 year period in total within 10 years preceding the day of change of the tax residency status.
The exit tax rate is equal to 19% and 3%. The lower rate is applicable in case when the income is not to be decreased by tax deductible costs. In practice, the most common tax rate is 19%.
Type of assets covered by exit tax
In case of moving the tax residency abroad, exit tax is due only with regard to the following assets:
- rights and obligations in a partnership,
- shares in a company,
- stock and other securities,
- derivatives and certificates.
It should be emphasized that exit tax is not limited to assets acquired during one’s Polish tax residency, but also assets acquired before the individual’s arrival to Poland.
Limits in exit tax
The general assumption of introduction of exit tax is to cover assets with value exceeding PLN 4 million. In case of moving assets abroad of a value lower than PLN 4 million the exit tax does not apply.
Date of payment and tax forms
The exit tax is due till 7th day of the next month after the value of moved assets exceeds PLN 4 million. There a re special form of declaration to be submitted before the aforementioned deadline: CIT-NZ and PIT-NZ.
Installments and tax return
According to the new regulations, the taxpayers are entitled to request payment of exit tax in installments for a period not exceeding 5 years.
Moreover, if an individual moves his/her residency abroad and then subsequently becomes a tax resident of Poland again, he/she will be able to apply for a refund of the exit tax.