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Payroll in Poland

Payroll in Poland

Updated on Monday 26th October 2020

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Payroll in Poland.jpgEmployers in Poland are required to observe a set of rules when hiring workers, and one of the issues that need to be addressed is that of the payroll in Poland.
 
An advantage when doing business in the country is that the taxation regime is beneficial in this sense. Namely, there is no payroll in Poland, no tax for this purpose. However, although this is an exemption, employers are required to pay their employees according to the provisions in the signed agreement and event though there is no payroll tax, they will need to pay other taxes on time.
 
Read below a few issues concerning payroll in Poland and please reach out to the tax and employment experts at our law firm in Poland for complete assistance.
 

Poland payroll

 
Payroll in Poland is a subset of accounting, and it represents the total amounts payable by a busines or employers to its employees in a given, pre-determined period of time. Calculating payroll can be performed in-house, by a team within the company or, most commonly, it can be outsourced to an accounting company in Poland that also provides these types of services.
 
Personal income tax is deducted at source in Poland, from the salaried paid by the company to its employees and it is administered by the Polish Tax Office. The benefits offered to employees in kind are also included in final income amount, simply by estimating the cash value of the said benefit.
 
Social security contributions are submitted to and administered by the Polish Social Insurance Institution, functioning under the Ministry of Labor and Social Policy.
 
Following the accounting principles is essential when starting a Polish business and our attorneys in Poland are able to provide you with specialized advice and assistance for observing the laws in force, including those relating to payroll in Poland.
 
We encourage companies to request specialized assistance in order to standardize the payroll process within the company, property manage the date and make the submissions as required by law. Working with a partner company that specializes in these services is often preferable, especially for foreign companies in Poland.
 

Employment contributions in Poland

 
Although there is no payroll in Poland as a separate tax, employers are responsible for paying a number of taxes when they hire employees, along with the main income. These are listed below by our lawyers:
 
  • Social security contributions: the total amount is around 35%, out of which approximately 21% is paid by the employer and the remaining amount, 14%, by the employee.
  • Income tax on salary: the individual income tax rate in Poland varies according to the taxable income and it can have rates of 4%, 17% pr 32%, as listed below by our lawyers in Poland;
  • Minimum wage: the minimum wage in Poland can change, however, our inform investors that in 2020 this had a value of 610.8 € per month;
  • Bonuses: these are established by the employer and they are subject to the 19% capital gains tax.
 
Severance pay in Poland is another issue to consider, and this can vary according to the rates established in the employment agreement.
 
The national minimum wage is important, as are the rest of the employment conditions in the country. Before hiring employees, entrepreneurs can discuss these aspects with our employment lawyers in Poland.
 

Doing business in Poland

 
The costs related to doing business in Poland are relatively low from an employment-related and payroll perspective, compared to those in other European countries. As mentioned, employers are not subject to a payroll tax, however, there are several other important taxes for a company that need to be added up when calculating the costs.
 
Observing the conditions for employment and payroll in Poland are not the only ones that need to be taken into consideration by those who open a business. The main taxes for corporations are the following:
 
  1. Corporate income tax: the general corporate income tax rate in Poland is 19%; this rate also applies to branches;
  2. Lower corporate tax: a lower rate of 9% can apply to income other than capital gains for small companies are those that are just commencing their activities, if they have a revenue lower than 1.2 million EUR in the tax yar (subject to certain exceptions);
  3. Dividend taxation: dividends received by a resident company in Poland from another Polish, EU/EEA or Swiss company can be subject to an exemption from the withholding tax on dividends;
  4. Capital gains: these are taxed separately at a rate of 19% and an exemption can apply to venture capital companies.
 
Investors who need more details about payroll in Poland, general employment conditions and the applicable law as well as any other matters related to doing business can contact the experts at our law firm in Poland.