What is the return relief?
The return relief is a special tax exemption introduced as part of the Polish Deal. Its purpose is to encourage Poles living abroad to return and settle permanently in Poland. This exemption covers personal income tax (PIT) and allows for the avoidance of taxation on specified income for four consecutive tax years.
Who can benefit from the return relief?
The return relief is available to individuals who have transferred their place of residence to the territory of Poland after a period of at least three years spent abroad. The exemption covers income obtained from:
- official service relationships, employment relationships, outwork, and cooperative employment relationships,
- commission contracts specified in Article 13 point 8 of the PIT Act,
- non-agricultural business activity taxed according to the principles specified in the PIT Act.
It is worth noting that the exemption amount is a maximum of 85,528 PLN annually. Income exceeding this amount will be taxed according to general principles.
Conditions for using the return relief
To use the relief, the taxpayer must meet a number of conditions specified in Article 21 paragraph 43 of the PIT Act. Key requirements include:
- Change of tax residency – the taxpayer must become a Polish tax resident and be subject to unlimited tax liability in Poland.
- No place of residence in Poland for the last three years – the taxpayer could not have had a place of residence in the territory of the Republic of Poland in the three calendar years preceding the return.
- Citizenship or legal status – the taxpayer must hold Polish citizenship, a Polish Card, or citizenship of another EU/EEA/Switzerland country.
- Long-term residence abroad – the taxpayer must have resided in one of the listed countries for at least three years before returning.
- No prior use of the relief – the taxpayer cannot use the exemption again if they have already used it in the past.
To confirm fulfillment of the conditions, the taxpayer should present a tax residency certificate or other documents confirming the place of residence for tax purposes.
Rules for using the relief
The return relief can be applied during the tax year, and its application occurs when calculating the advance payment on income tax. The condition is submitting a written statement to the employer or other tax remitter confirming that the conditions for applying the exemption are met.
The remitter applies the relief no later than the month following the submission of the statement. If the taxpayer informs the remitter of a change in the factual situation, the remitter ceases to apply the exemption from the following month.
The return relief came into force on January 1, 2022 and applies to taxpayers who transferred their place of residence to Poland after December 31, 2021 and to income obtained by them from January 1, 2022.
