Double taxation agreements (DTA) are intended to prevent situations where the same income is taxed both in Poland and in the country where it was earned. Poland has signed such agreements with most countries around the world – including all EU member states, the United Kingdom, the United States, Canada, Norway, Switzerland, and many other jurisdictions.
Each agreement sets out the rules for taxing different types of income and establishes which country has the primary right to tax.
The agreement regulates, among others:
- which country has taxing rights over specific types of income – such as employment income, rental income, business income, dividends, interest, or capital gains,
- the method Poland uses to avoid double taxation – either the exemption with progression method or the proportional credit method,
- the rules for determining tax residency in cases of dual residency (known as tie-breaker rules),
- definitions of key terms such as residence, permanent establishment, or passive income.
In practice, this means that a foreigner living in Poland may be subject to taxation on their foreign income in the source country, in Poland, or in both – depending on the scope of the relevant agreement.
If, under the agreement, the income is taxable abroad, Poland applies the appropriate relief method to avoid double taxation, so that the same income is not taxed twice.
For example, a person living in Poland and earning income from employment in a country that has signed a tax treaty with Poland may be required to pay tax only in the country of employment, or may have to declare the income in Poland and apply the appropriate settlement method – depending on the provisions of the agreement.
Understanding the rules set out in the DTA is crucial for proper tax compliance, especially for individuals who receive income from multiple countries.
getsix® analyses the situation of international taxpayers, determines the correct tax residency, and selects the appropriate taxation method in line with the relevant double taxation agreement:
