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Poland’s joining the European Union in 2004 opened new perspectives
both for our country and for the EU, with one of the EU’s pillars,
people’s freedom of movement, offering new opportunities for the
citizens of Poland and the EU.
Many Poles, suffering from high unemployment in their native country,
have treated this newfound freedom of movement as a chance to work in
the countries of the so-called ‘old’ Europe, which have opened their
markets to the citizens of the states of the ‘new’ expanded Europe.
Meanwhile, the citizens of the former fifteen EU states have been
offered access to the large Polish market with the opportunity to
expand their own commercial capabilities.
In practice, every EU foreigner wishing to commence employment in
Poland or establish his/her own business here must cope with many
formalities. It must be stressed, however, that Polish citizens face a
similar amount of red tape as our foreign friends who wish to work
here. An exception to this rule is the residency permit necessary for
every EU citizen who wants to work in Poland and whose stay exceeds
three months. This requirement results from the rule requiring a Polish
language ID document, which enables Polish clerks and public service
officers (the police, for example), whose skills rarely comprise the
command of foreign languages, to confirm personal data. Additional work
permit requirements have been introduced for citizens of those EU
countries that have not opened their markets for Poles.
Acceptance into EU countries from behind the old ‘iron curtain’, apart
from opening up new opportunities and perspectives, has brought about
new, previously unknown or rarely experienced problems to the EU. One
such problem is the issue of tax residence certificates. Many
foreigners who come to Poland ask where they should declare their
sources of income and where the tax levied on the total of their income
should be paid.
The determining factors are the rules of establishing tax residency in
the treaties on avoidance of double taxation between Poland and each of
the other EU countries. However, in real life establishing tax
residency often proves difficult, despite the rules.
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Tax residency depends on ‘the place of residence’. Whoever knows what
this really means should receive a gold medal. The relevant regulation
(not a tax one) defines a place of residence as a place where a natural
person lives with ‘the intention of a permanent stay’. Does this mean
that in the case when I live in some place without the intention to
stay there permanently, my place of residence is not where I live?
Based on the colloquial understanding of this regulation and its
literal meaning, it is to be concluded that it is possible to live in
Poland without having one’s place of residence here. Therefore, each
foreigner has the right to claim that he or she does not intend to stay
in Poland permanently and consequently his or her tax residence is
elsewhere. Some authorities have their own interpretations, according
to which the intention to stay permanently is confirmed by objective
and visible signs, understood by third parties as evidence that our
neighbour intends to bother us forever. But there is a certain doubt of
the validity of these interpretations, at least to me.
When it is not possible to establish a tax residency, the treaties on
avoidance of double taxation according to the rules advise to resort to
additional criteria to specify the place of residence. The list of
these criteria, however, is drawn up in such a way as to make it almost
always possible to recognise somebody as tax resident.
Cooperation between the Polish tax authorities and the tax authorities
of those EU countries that have opened their markets to Polish citizens
is bound to improve gradually due to the common fiscal target. If tax
authorities in each of the countries are as nosey as the Polish tax
authorities, an increase in the efficiency of tax information exchange
between the countries is to be expected. There are institutions dealing
with obtaining information on citizens leaving their country for the
purpose of undertaking paid work abroad. These are not ‘rapid action’
measures, but, as some say, the wheels of justice grind slowly but
surely.
1 The author is BPCC Honorary Treasurer |
