Tax Equalisation in Poland

Polish companies often turn to tax equalisation rules from abroad, who do not comply with the tax and legal requirements of Polish law. Recently, the accumulation of recent cases in which employees seconded abroad, were questioning their claims arising from the adjustment of tax accounted for by the regulations in force for the company.

Employees refused to refund the excess payments and preferred to litigate the dispute in court. This has caused doubts about the legality of such practices. A case was heard even before the Supreme Court and the Court of Appeals. It is important that none of the courts has put the legality of the application of the tax equalisation rules in Poland in question. However, the decisions suggest that the tax equalisation rules in accordance with the Polish tax and labour laws need to be translated, so that they can be successfully applied.

The provisions of the tax sharing rules for employers are inadequate to implement in practice, correctly and safely for their workers. Nevertheless, the tax equalisation can be applied as long as a proper legal documentation is available. Since the tax equalisation relates to the tax affairs of the employer and employee, it is important that the clauses in agreements and corporate regulations, along with the rules of Polish income tax and corporation law are compatible.