Repatriation Program

July 2, 2021 Poland

The Ministry of Finance presented details of the so-called Repatriation Program, which aims at (i) encouraging Polish citizens to return to Poland and (ii) creating favorable conditions for investments and family business in Poland.

Below we present the main assumptions of the Program.

Relief for return

  • Individuals living and working abroad for at least 3 years who decide to return to the country, in the first year after their return will be entitled to a deduction of 50% of the tax due in the year of tax residency change (the so-called base year). In the following three years the deduction will amount to 50% of tax paid in the previous year.  
  • The deduction will apply also to individuals who file a joint tax return with their spouse or children. 
  • It will also apply to social security contributions which, at the insured's request, will be financed at 50% (or 100% in the case of sickness insurance contributions) from the state budget. Returnees will benefit from this preference provided that they are subject to social insurance in Poland for at least half a year.
  • Relief will be applicable for the first 4 years as of the return to Poland.

Lump-sum for new investors

  • Individuals who decide to change their tax residency to Polish and start investing in the country more than PLN 100,000 per year for such purposes as innovation, science, culture, and sports, will pay tax not exceeding PLN 200,000 (the so-called "maximum tax").
  • Lump-sum is dedicated to persons who have not been Polish tax residents for at least 5 out of 6 preceding tax years.
  • Income generated in Poland will be taxed on general rules.
  • Preference will be available for a maximum period of 10 years.

Tax abolition

  • From July to December 2022, taxpayers will benefit from a tax abolition allowing for a one-off declaration of undisclosed income. It will be subject to 8% lump-sum taxation. Alternatively, it will be possible to pay 2% tax on the value of assets accumulated abroad - this may be beneficial if gathering documentary evidence of costs incurred would be problematic.
  • This income would be exempt from penalty interest.
  • Preference will apply only to income taxes - the program will not cover any other taxes, e.g. VAT.
  • It will be possible to request an official opinion as to whether an individual's case may be covered by the Program, however, it would not,e binding for the tax authorities. Only the tax advisor will be entitled to submit such a request.
  • The taxpayer who invests in Poland the amount of the disclosed income will receive from the state budget a refund of 30% of the lump-sum tax.

Family foundation

  • The institution of the family foundation is aimed at securing the succession of family businesses so that the equity generated in Poland remains here.
  • Contribution of assets to the foundation by its founder will not be taxed.
  • Transfer of funds from the foundation to selected beneficiaries will be taxed similarly to the taxation of a direct transfer of those funds by the founder, including tax exemptions for family members.
  • The family foundation will be allowed to conduct business activities.
  • Companies held by the foundation will be subject to dividend and participation exemptions.
  • Entrepreneurs relocating the family foundation from abroad to Poland will be subject to repolonization relief and exemption from PIT.

Relief for CSR

  • Relief for Corporate Social Responsibility is dedicated to Polish entrepreneurs who invest in specific areas of activity, such as cultural institutions, sports clubs, or universities. 
  • Entrepreneurs will be entitled to recognize 150% (and not 100%) of the incurred cost incurred for the above purposes in CIT calculation.

Pre-consultations on the draft regulations will be launched in the nearest future. We will keep you informed about them in future publications.

We also wrote about particular Polish Deal solutions in previous articles on our ASB blog:
"Polish Deal" - the announcement of major changes in taxes
"Polish Deal" - detailed solutions

Łukasz Bączyk
Łukasz Bączyk Head of Tax, Board Member
ASB Poland
lbaczyk@asbgroup.eu
Karla Pejko
Karla Pejko Tax Consultant
ASB Poland
kpejko@asbgroup.eu