Ulga na powrót: up to 85,528 złoty a year tax free for four years, Dutch citizens included

The ulga na powrót sounds like something for Poles coming back, and that is also how it is promoted. But the act puts a second group next to them: whoever holds the nationality of another EU country, an EEA country or Switzerland. A Dutch citizen who goes to work in Poland can therefore earn up to 85,528 złoty a year in salary or profit for four years without Polish income tax. The pitfall is in what does not fall under it: a pension, AOW or a benefit. For whoever goes to Poland on a pension, this scheme doesn't exist.

Who qualifies?

The conditions are in article 21 of the Polish income tax act, and they all apply at the same time:

• through the move you have become a tax resident of Poland: you have the centre of your personal or economic interests there, or you are there for more than 183 days in a tax year;
• you did not live in Poland in the three calendar years immediately before the year of your move, nor in the part of the year of moving before the moving date;
• you have Polish nationality, a Karta Polaka, or the nationality of another EU country, an EEA country or Switzerland;
• you can prove your foreign residence in that period, with a certificate of residence or other evidence;
• you have not used the scheme before.

The Ministry of Finance adds that it concerns people who came to live in Poland after 31 December 2021. And the certificate of residence is not a hard requirement: according to the ministry's guide, other documents also suffice, such as a Dutch employment contract or a rental agreement. If they are not in Polish, the tax office can ask for a translation.

Which income falls under it, and which doesn't?

Income	Under the ulga na powrót?
Salary from an employment contract	yes
Contract of mandate (umowa zlecenia) with a company	yes
Profit from a sole proprietorship, on the scale, the 19% flat tax, the 5% IP box rate or the lump-sum tax	yes
Maternity benefit	yes
Pension, AOW, other benefits	no
Sickness benefit and other social benefits	no
Work on the basis of an umowa o dzieło	no
Copyright income, except within an employment contract	no

The ceiling of 85,528 złoty applies per tax year, and it is not an amount per scheme. Poland has three other exemptions with the same ceiling, for young people, for families with four or more children and for working seniors, and they count together: more than 85,528 złoty of exempt income a year is not possible. What you earn above it falls under the normal scale of 12% up to 120,000 złoty and 32% above that, with the tax-free amount of 30,000 złoty.

Which four years count?

You choose. The exemption runs for four consecutive tax years, from the beginning of the year in which you moved to Poland, or from the beginning of the following year.

If you move late in the year, work out both options. Whoever arrives in October and chooses the year of moving as the first year uses one of the four years for three months of income. If you choose the following year as the start, you simply pay tax on those first months, but then have four full years. You record the choice in your statement to the employer, so make it before your first payslip.

How do you apply for it?

If you work as an employee or on a contract of mandate, the employer applies the exemption to the monthly withholding, but only if you declare in writing that you meet the conditions. There is no official form; the ministry's guide has a model statement. In it you name the first and last year of the exemption, and you include the sentence that you are aware of the criminal consequences of a false statement. The employer applies the exemption at the latest from the month after receipt. If something changes, for example because with two employers together you exceed the ceiling, you must report it.

As a self-employed person you apply the exemption yourself in your advance payments. In both cases the final settlement follows in your annual return.

What does this mean for social contributions?

The ulga na powrót is in the income tax act and only concerns that tax. The ZUS contributions and the health contribution have their own rules, and as a starter with your own business there are separate reductions there (see working in Poland).

And the Dutch side?

The tax treaty determines who may tax which income, and for pension and AOW that works out differently with Poland than many people think. That is in AOW, pension and tax in Poland. Where the tax steps fall in your own order is in the step-by-step plan for Poland.

In Vertrekklaar this is phase 2 of 5 of the journey, step 2.3: the same steps, but for your situation — in your order, tickable, and with the deadlines watched. See the whole journey to Poland or go straight to step 2.3 in the open plan.