This post is meant for people, who have doubts regarding their tax residency. The advice is based on a case of a person, who moved from the UK to Poland.
Let’s assume, that in the last years You had a tax residency in the UK, that the employer is based in the UK and that You moved to Poland in 2019.
You obtain income from employment and You aren’t an entrepreneur.
In order to answer the question whether Your tax residency changes when You moved to Poland in 2019, we have to look in the articles of the Double Taxation Convention between UK and Poland, signed in 2006.
You shall show in one country in the annual tax declaration Your worldwide income (earned in all countries in which You worked in a given year) and that means You have a tax residency in that country.
Article 12 ‘Income from employment’ states, that if Your employer is based in UK, Your remuneration derived in Poland shall be taxed only in UK, if You’ve spent less than 183 days in Poland in 2019, therefore Your tax residency doesn’t change in 2019. This is under the assumption, that You don’t get paid by a Polish branch office of Your UK employer, because that’d change the situation.
However, if You remain living and working in Poland and Your stay exceeds 183 days, You become tax resident of Poland as of 184th day. Therefore in 2020 You may have to change the tax residency and from that moment Your centre of vital interests will be in Poland. You will have to show in Poland in the annual tax declaration for 2020 all the income You’ve earned worldwide in 2020.
As far as the previous years are concerned – the treaties with other countries are all the same regarding the income from employment – if You were employed by a company from UK and You’ve spent at least 183 days in each year in UK, Your tax residency was in UK.
If You stay in Poland, You become Polish tax resident from the 184th day of Your stay, calculated from 1st October 2019. This is caused by the wording of Article 12 ‘Income from employment’ of the Double Taxation Convention between UK and Poland, which states, that You have to pay income tax in the country where the work is excercised, when the stay exceeds 183 days in any 12 month period.
Of course there shall be no double taxation of income, so the tax You pay from the beginning of 2020 till the change of residency, will be deductible from the amount of Polish taxes, but that will happen in the annual tax declaration in Poland, when You prepare Your annual tax declaration for 2020 and submit it in the beginning of 2021. So You show in the annual tax declaration for 2020 all Your income earned in 2020 and You calculate the tax due, but then You deduct the taxes paid in the UK.
When the period of stay in Poland exceeds 183 days You should register Yourself in the Polish tax office and start to pay the advance payments of the income tax till the 20th day of the month for the preceding month. So for example if Your stay exceeds 183 days on 01.04.2020, You have to pay the income tax for April till 20th May 2020. Your employer from UK will not register You, but it’s Your responsibility to inform the Polish Tax office that You change the tax residency and You start paying income tax in Poland. You also have to inform the employer not to withold any income tax in the UK any more.
I hope my explanation is clear and helpful. Do You have any more questions? Please contact me per email or telephone.
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