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Return relief: zero PIT for people returning from emigration
Return relief is a new tax preference intended to encourage Poles to come home after a longer stay abroad. It exempts certain income earned over four consecutive tax years from personal income tax (PIT). The taxpayer must have transferred their residence to Poland after 31 December 2021.
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Who can use return relief?
The relief is available to taxpayers meeting several requirements:
- They moved their residence to Poland after 31 December 2021 and have unlimited tax liability in Poland.
- They did not reside in Poland during the three years preceding the year of return or from the beginning of the return year until the day of return.
- They have Polish citizenship, a Pole's Card or citizenship of another EU or EEA country, Switzerland or selected non-European countries.
- They have a residence certificate or other evidence of living abroad for tax purposes.
- They have not previously used this relief if moving to Poland again.
What income does the relief cover?
Tax-exempt income includes:
- Employment income (employment contracts, service relationships, home-based work, cooperative employment).
- Income from service contracts with a company.
- Maternity benefits.
- Income from business activities taxed on the progressive scale, at the 19% flat rate, at 5% under IP Box relief or as a lump sum on recorded revenue.
What income is excluded?
The relief does not cover:
- Cash social insurance benefits other than maternity benefits.
- Income from contracts for a specific work.
- Copyright income unless earned under an employment contract.
- Income subject to flat-rate income tax under the PIT Act.
- Income otherwise exempt from income tax (apart from return relief, for example travel allowances and other business-trip benefits).
Exemption amount and limits
Exempt income cannot exceed PLN 85,528 annually. The total income exempt under PIT-0 (return relief, youth relief, relief for families with four or more children and for working seniors) also cannot exceed this amount. If total income exceeds the limit, the excess is taxed on the progressive scale, taking account of the tax-free amount (PLN 30,000).
How do you apply return relief?
It can be applied during the year, with final settlement in the annual return. Taxpayers calculating their own advance payments or tax may exclude eligible income from taxable income. An employer or client may apply the relief at the taxpayer's request; the taxpayer should submit a declaration confirming they meet the conditions.
If you found this article interesting, explore our tax advisory services and read how we can help you:
Summary
Return relief is attractive for Poles returning after a long stay abroad. Four years of income-tax exemption may make returning to Poland more financially worthwhile. To benefit, meet the conditions and keep the right documents and declarations. If in doubt about tax and accounting, contact TaxCoach accounting firm, whose experts handle both accounting and tax advice.
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