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Well known for its qualified IT workforce, Poland has granted individuals working in the IT industry significant tax incentives resulting in the reduction of taxable income for high-earners.
Tax incentives apply both to people that work as employees as well as contractors that perform services as sole traders (so called B2B).
Sole traders performing services as sole traders in Poland can benefit from a newly introduced law, 'IP Box'. The concept of IP Box is a preferential taxation of income achieved from the creation or improvement of qualified intellectual property right (eg web based apps, new functionality to existing programs, developing software). The preferential tax rate in case of sale of such qualified intellectual property right is only 5% instead of 19% or 18/32% where progressive rates apply. In order to benefit from this incentives taxpayers must fulfill certain conditions including retaining documentation of the projects.
Employees creating new programs or apps may take a 50% tax deductible expense meaning that only half of their income will be subject to taxation. It is significant reduction used widely by software developers to attract specialist with higher net earnings while mitigating gross employment costs. Importantly the company using this tax regime must implement a policy regarding the 50% tax deductible expense.
If you would like to discuss the full implications of these changes, please contact Łukasz Boszko, Michał Rodak and Małgorzata Samborska or your local Grant Thornton office.
Read more insights on tax changes affecting internationally mobile employees.