Taxes in Poland

Employer Contributions in Poland

Social security

Social security contributions, which both employers and employees contribute to, are approximately 35% of an employee's salary. While individual caps are in place, the employer portion is between 19.21% and 22.14% of the employee's gross pay.

The employer contribution includes accident insurance, whose amount varies based on employee count and the business sector.

The pension and disability contributions are capped at salaries of 208,050zł (2023). Beyond this amount, the employer does not pay any contributions.

Employees' contributions are withheld and remitted by the employer to the Social Security Authorities (ZUS) alongside their contribution.

Employer's social security contribution breakdown

 

CONTRIBUTION	CONTRIBUTION AMOUNT
Pensions & disability insurance	19.52% of the total gross salary
Accident insurance	1.67% of total gross salary for employers that employ up to nine employees. 0.67% to 3.33% of total gross salary for employers that employ more than nine employees (the precise rate depends on the business sector). Foreign employers pay a flat rate of 1.67%.
Labour Fund	2.45% of the total gross salary
Employee Guaranteed Benefits Fund	0.10% of the total gross salary
Solidarity Fund for Support of Disabled Persons	The product of 40.65% of the average salary and the number of employees corresponding to the difference between the employment ensuring the achievement of an employment indicator for disabled persons of 6% and the actual employment of disabled persons. Entrepreneurs who employ at least 25 people full-time and at the same time do not achieve the minimum 6% employment indicator for disabled people are obliged to pay that contributions.

Employee capital plans (PPK)

PPK is a mandatory employee long-term retirement savings program financed jointly by the employee, the employer and the government and operated by a third party financial institution.

The employer pays a basic contribution of 1.5% of the gross salary to each participating employee. Employers can opt for an additional contribution of up to 2.5% extra. There are no caps.

The employer should also calculate, deduct and submit the employee contribution to the financial institution which operates PPK.

Health insurance

Only employees make health insurance contributions in Poland. However, when the employer runs payroll, they should calculate, deduct and submit the employees' contribution on their behalf.

Employee Contributions in Poland

Residents of Poland are subject to tax on their worldwide income, whereas non-residents are subject only to tax on the income generated within the country. To be considered a resident, an individual must spend more than 183 days a year in Poland and/or base their personal or economic interests in Poland.

GROSS INCOME	PROGRESSIVE TAX RATE (%)
Up to 120,000zł	12% (minus amount decreasing tax)
Over 120,000zł	32

Employed individuals under 26 years of age are exempt from tax on income up to 85,528zł per year.

Solidarity tax

All Polish residents who earn more than 1 million zł are subject to a solidarity tax of 4% on the excess.

Social security

Employees pay 13.71% of gross salary for social security.

The employer withholds the employee contributions and remits them alongside their contribution.

Employee social security contribution breakdown

CONTRIBUTION	CONTRIBUTION AMOUNT
Pensions and disability insurance	14,020
Sickness insurance	2.45% of total gross salary

Healthcare

Employees must make a 9% healthcare contribution. Minimum of 314,10 zł per month.

Up to 7.75% of the contribution can be deducted from tax. The remaining part of the healthcare contribution (1.25% of the assessment basis) is a non-deductible cost, which decreases the after-tax income.

Employee capital plans (PPK)

PPK is voluntary for employees. However, if they are between 19 and 54 years of age, they are enrolled in PPK by default, which they can opt-out of. If employees are between 55 and 69 years of age, they must apply to join. Employees over 70 years of age cannot join PPK.

The basic employee contribution is 2% of gross remuneration. The employee may opt for an additional contribution of up to 2% of their gross salary.

Tax-Free Allowance in Poland

Personal allowances

There is a personal allowance (amount decreasing tax) for all taxpayers whose annual income does not exceed 120,001zł. This allowance is a credit against PIT (not a deduction from the taxable base). Tax-free amount in 2023 is 30,000zł.

Child deduction

Furthermore, the annual income tax due for 2021 can be reduced by:

• 1,112zł per child in a family (including foster families) with one child. The taxpayers' joint annual taxable income should not higher than 112,000zł (for married taxpayers) and 56,000zł (for single taxpayers)
• 1,112zł per each child in a family (including foster families) with two children (irrespective of taxpayer's income)
• 1,112zł for the first and second child, 2,000zł for the third child, and 2,700zł for fourth and each subsequent child in a family (including foster families) with three or more children (irrespective of taxpayer's income).

If a child was only partially in the custody of the individual, the allowance is proportionally lowered.

Employment expenses

The following employment expenses are tax-exempt:

• Monetary reimbursements for using personal tools, goods, and equipment to perform work
• Reimbursement of relocation and set-up in a new place costs (up to 200% of the monthly salary)
• Limited daily allowances and other amounts for business trips
• Additional pay and benefits to employees who have been temporarily transferred to work away from their home (principles and limits outlined in state employees' rules apply)
• Value of accommodation rented by the employer for employees (up to a specific limit)
• Limited payments to employees who use their private cars for company business

Personal deductions

Charitable contributions

Individuals can deduct donations from their gross income, subject to many conditions and an a cap of 6% of taxable income.

Healthcare expenses

Disabled taxpayers or taxpayer supporting a disabled individual can deduct expenses for rehabilitation and costs related to facilitating life activities. Examples include adaptation to and equipping of apartments, residential buildings, motor vehicles to meet disability needs; purchasing and repairing personal equipment, appliances, and technical instruments necessary for rehabilitation or facilitating life activities, according to the disability needs. The only exception is household equipment. Taxpayers should document all expenses.

Taxes paid

Social security contributions by employees can be deducted up to specified limits.

Under some conditions, it is possible to deduct compulsory social security contributions from taxable income if paid in another EU or European Economic Area (EEA) member state or in Switzerland.

Standard deductions

Monthly deductible expenses are 250zł per month. This is a standard deduction for employees. The annual limit of tax costs cannot exceed 3,000zł. If obtaining income from more than one employment relationship, the upper limit of costs increased to 4,500zł.

The limit of the deduction is 120,000zł per annum.