How Poland’s network of double taxation treaties allocates the right to tax cross-border income — the two relief methods, who is affected, the abolition relief allowance, and how treaty relief connects to withholding tax.
Aneta Majchrowicz-Bączyk
Partner / Attorney at law (PL)
Head of getsix Tax & Legal
What is double taxation?
Double taxation arises when the same income is taxed in more than one country. A person who is tax resident in Poland has unlimited tax liability here — in principle, their worldwide income is taxable in Poland — while the country where the income is earned usually taxes it at source as well. Without a corrective mechanism, the same salary, dividend, interest or fee would be taxed twice.
Double taxation agreements (DTAs), also called double taxation treaties, exist to prevent exactly this. They are bilateral treaties that decide which country may tax a given type of income, and by which method the other country provides relief.
Residence and source
Two ideas run through every treaty: residence (which country the taxpayer belongs to) and source (which country the income comes from). Where residence is unclear, treaties apply tie-breaker rules; a tax residence certificate is normally needed to rely on a treaty.
How double tax treaties work
A double taxation agreement allocates the right to tax specific categories of income — employment, business profits, dividends, interest, royalties, pensions and others — between the country of residence and the country of source. Poland has concluded around 100 such treaties, so most cross-border situations are covered by one.
The binding, up-to-date list of Poland’s treaties is maintained by the Polish Ministry of Finance: list of double taxation treaties (podatki.gov.pl).
The two methods for avoiding double taxation
Every treaty relieves double taxation by one of two methods. Which one applies depends on the specific treaty — and can change over time, for example following the OECD Multilateral Instrument (MLI).
Exclusion with progression
Income earned abroad is exempt from tax in Poland, but it is taken into account when setting the tax rate applied to the person’s Polish-taxed income (the progression principle).
For example: historically applied under Poland’s treaties with Germany, France and the Czech Republic.
Proportional deduction (credit)
Foreign income is taxable in Poland, but tax paid abroad is credited against the Polish tax due, up to the Polish tax attributable to that income.
For example: applied under the treaties with the Netherlands, Norway and the United States — and as the default where no treaty applies or a treaty has no specific provision.
Who double taxation affects
Cross-border tax questions most often arise for:
- Expatriate workers and employees posted between countries.
- Management board members resident in one country while serving a company in another.
- Cross-border workers within the EU.
- Remote employees — IT specialists, developers and designers working for a foreign employer.
- Professional athletes and artists earning income abroad.
- Civil servants posted abroad, and pensioners living outside their home country.
- People returning to Poland who continue to earn from a foreign source.
We invite to contact us. We will be happy to answer your questions.
The abolition relief allowance
Alongside the treaties, Polish domestic law provides an abolition relief allowance (ulga abolicyjna) that can reduce the tax burden — for instance where there is no treaty with the source country, or where the applicable treaty uses the less favourable proportional deduction method.
Change from 1 January 2021: the abolition relief was significantly limited for Polish residents (sailors excepted) earning in countries covered by the proportional deduction method, which increased their effective tax.
Treaties and withholding tax
Double taxation treaties are also what reduce or remove Polish withholding tax on cross-border payments leaving Poland — dividends, interest and royalties paid to foreign recipients. A treaty rate is not applied automatically: it requires the recipient’s tax residence certificate, verification of beneficial owner status where relevant, and documented due diligence by the Polish payer before the payment is made.
This is where a double taxation treaty stops being a general principle and becomes a concrete calculation on a specific payment.
Applying treaty relief in practice
getsix® advises on how double tax treaties and withholding tax interact — cross-border payment analysis, treaty relief, beneficial owner review, exemption opinions, WH-OSC support and refund procedures — so payments from Poland are handled correctly and a defensible position is in place before payment.
Withholding tax services in Poland →Frequently asked questions
What is a double taxation agreement?
A bilateral treaty between Poland and another country that decides which country may tax a given type of cross-border income, and how the other country relieves double taxation — either by exemption (with progression) or by crediting the tax paid abroad.
Which method applies to my income?
It depends on the specific treaty between Poland and the country where the income arises. The two methods are exclusion with progression and proportional deduction; the applicable one is set out in that treaty, and the current list is published by the Ministry of Finance.
What is the abolition relief allowance?
A domestic Polish allowance that can reduce tax where the proportional deduction method or the absence of a treaty would otherwise lead to a heavier burden. Since 1 January 2021 it has been significantly limited for most residents earning in proportional-deduction countries.
Does a treaty remove Polish withholding tax automatically?
No. A reduced treaty rate or exemption on dividends, interest or royalties requires a valid tax residence certificate, beneficial owner verification where relevant, and documented due diligence by the Polish payer before the payment.
