Poland Payroll Services

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Poland Payroll Services

Successful international expansion depends on making the right moves from day one. This is vital for foreign companies establishing a presence and planning to operate payroll in Poland. Although foreign companies need not set up a legal entity to run payroll in Poland, they must follow an exhaustive procedure of providing documentation and registering with tax and social insurance authorities.

Bradford Jacobs’ Professional Employer Organization (PEO) and Employer of Record (EOR) platforms and networks will provide complete answers to every question your company will encounter moving into the economy.

Our teams step in from the start by dealing with the National Revenue Administration (Krajowa Administracja Skarbowa, KAS) to obtain the Tax Identification Number (NIP) for each employee and also for the company. Further registration steps are also required with the social security agency and the register for business activity.

You may encounter some challenges regarding payroll but allow us to take the reins and answer any of your questions and concerns with our trusty guide on payroll for Poland

What Poland Payroll Options are available for Companies?

  1. Remote Payroll: This option allows businesses to operate under a single payroll system, by adding employees in Poland to the parent company’s payroll. However, these employees must operate under different regulations, which is likely to cause problems.
  2. Internal Payroll: You may operate payroll for your subsidiary, especially if you are committed to growing your company’s presence in Poland. However, this does require hiring dedicated HR staff who understand Poland’s employment and compliance laws.
  3. Poland Payroll Processing Company: If you are considering outsourcing, then working with a Polish payroll company will help in processing your payroll – but not when it comes to compliance.
  4. Poland Payroll Outsourcing: However, there is another option available that solves both concerns – by working with Bradford Jacobs. We can handle payroll and compliance for all your employees in Poland. We lift the administrative stress from your shoulders so you can focus on what you do best.

Poland Payroll Services

Companies advancing their international operations into Poland open a vista of opportunities in the Central and Easter Europe (CEE) region, throughout the European Union and further afield.

Challenges come alongside the potential benefits, however. Payroll management is among those challenges, whether your company is considering moving employees abroad or hiring new staff in-country. Employment laws, payroll and income tax regulations are areas where you cannot afford mistakes.

Foreign companies wanting to hire staff and operate their payroll in Poland have the option of establishing a legal entity, although this not a legal requirement. A limited liability company – known as a spolka.z.o.o. – is the typical choice for incoming businesses and requires minimum share capital of PLN 5,000 (€1,100, US$1,260). This is the most popular form of company set-up in Poland. The company must be registered with both the National Court Register (KRS) and Central Register for Information on Business Activity (CEIDG).

Taking this step before running payroll in Poland requires an in-depth knowledge of company, employment, and taxation laws, which changed in January 2022 – and keeping up to date with these changes.

However, there is an alternative and simpler route. Bradford Jacobs’ will navigate around these potential pitfalls effectively and efficiently. We recruit the staff in-country and then put into action our comprehensive knowledge of tax and payroll regulations. As part of our service, Bradford Jacobs files returns, and remits associated payments for tax and social security contributions directly from our payroll system to the relevant authorities.

Outsourcing your payroll in Poland will streamline your operations by dealing with the following:

  • Applying for the employees’ Tax Identification Numbers (NIP)
  • Registering employees with the Social Insurance Institution (ZUS)
  • Registering employees with the National Statistics Agency (GUS)
  • Filing forms for remitting tax with the National Revenue Administration (KAS)
  • Withholding and remitting tax and social insurance contributions to the relevant authorities
  • Compiling Personal Income Tax (PIT) returns comprising all income from employment, including bonuses and overtime, as well as benefits in kind
  • Making advance monthly or quarterly PIT payments where required
  • Filing PIT returns for employees where required, by April 30 of the year following the tax year

Outsource your Payroll for Poland

The above checklist highlights why the vast majority of foreign companies expanding into Poland’s strictly regulated business environment hand their payroll to EOR experts such as Bradford Jacobs. By outsourcing payroll, your company complies with tax and employment regulations without risking sanctions or financial penalties for late or incomplete filing. You focus on your goals and expansion, free of any concerns over payroll.

Questions? We have the answers. Contact Bradford Jacobs now

What is required to set up Poland Payroll?

Companies planning to run payroll by establishing a legal entity subsidiary in Poland, typically select a private limited liability company known as a spolka.z.o.o. It operates under Poland’s Company Law, which incorporates the Accounting Act, The National Court Register Act, the Commercial Companies Code, and the Act of Freedom of Economic Activity. Requirements include:

  • Registering with the National Court Register (KRS)
  • Registering with the Central Register for Information on Business Activity (CEIDG)
  • Obtaining company Tax Identification Number (NIP)
  • Registration with the National Revenue Administration (KAS) for Corporate Income Tax (CIT), Value Added Tax (VAT) and for withholding and remitting income tax contributions
  • Registering with the Social Insurance Institution (ZUS)
  • Registering with the National Statistics Agency (GUS)
  • Having one or more shareholders
  • Proof of having deposited minimum share capital of PLN 5,000 (€1,100, US$1,260) in a business bank account
  • The 13-digit REGON number needed to open the account, available from the GUS website once company details have been registered
  • The procedures for forming and dissolving the company
  • Management board
  • A supervisory board if share capital exceeds PLN 500,000 (€110,340, US$126,000) or there are more than 25 shareholders

Once incorporated, other steps must be followed in order to employ staff and operate payroll. The main requirements include:

  • Apply for the employees’ Tax Identification Numbers (NIP)
  • Register employees with the Social Insurance Institute (ZUS)
  • Register employees with the National Statistics Agency (GUS)
  • Filing forms for remitting tax with the National Revenue Administration (KAS)
  • Withholding and remitting tax and social insurance contributions to the relevant authorities
  • Compiling Personal Income Tax (PIT) returns, disclosing all income from employment, including bonuses and overtime, as well as benefits in kind
  • Filing PIT returns for employees where required, by April 30 of the year following the tax year

What Entitlement / Employment Laws apply to Poland Payroll?

Poland’s Labor Code is the key element of legislation governing the relationship between employers and employees, in addition to the involvement of trade unions and workers’ councils.

* Poland is a member of the European Union (EU) but not the Eurozone and retains the zloty as its currency.

National Minimum Wage (NMW): Poland has a federal mandatory minimum for wages, which from January 2022 is PLN 19.70 (€4.35, US$4.97) per hour and PLN 3,010 (€664, US$760) each month. The monthly wage reflects an increase of PLN 210 (€46.40, US$53) over 2021.

Sick Leave and Benefit: Benefit is paid for a maximum of 182 days (270 days if due to tuberculosis or during pregnancy). Regulations regarding benefit periods changed from January 1, 2022. If an employee falls ill with the same or different condition within 60 days of the end of the previous break, the two periods will be counted as the same entitlement period. Previously, even a one-day break between incapacities entitled to a new 182-day period. Exceptions apply to pregnant women. Benefit is paid by the Social Insurance Institute (ZUS) after the employer pays for the first 33 days, or until the 15th day if the employee is aged over 50. Benefit is calculated on the monthly average wage and varies between 70% and 100% depending on the type of illness or injury

Working Hours and Breaks:
Working hours are restricted to eight in a 24-hour period, or no more than 40 in a five-day week averaged over a period determined by the employer, which cannot exceed four months. Extended limits can be agreed to meet production demands. Employees are entitled to a paid 15-minute break for working six hours, with the option of an unpaid lunch break of 60 minutes – although many workers do not take this option as they would have to make up the hour at the end of the day. Poland’s Labor Code permits flexible working hours. 

Overtime: Overtime is restricted to 150 hours in a calendar year unless the employment contract, a collective agreement or the employer’s workplace regulations state otherwise. The total weekly working hours, including overtime, should not average more than 48 in the reference period determined by the employer. Overtime is 100% above the normal hourly salary for working Sundays or bank holidays; 50% extra for overtime on other days; 100% extra for every hour worked above the norm agreed for the reference period.

Paid Vacations
: Entitlement is 20 days for employees working for fewer than 10 years and 26 days after working for more than 10 years. In the first calendar year of employment, the worker is entitled to 1/12th of the annual allowance with each month that passes.

Public Holidays:

  • New Year’s Day                     January 1
  • Epiphany                              January 6
  • Easter Sunday                      March or April
  • Easter Monday                     March or April
  • Labour Day                          May 1
  • Constitution Day                  May 3
  • Whitsun                               June
  • Corpus Christi                      June
  • Armed Forces Day                August 15
  • Assumption of Mary             August 15
  • All Saints’ Day                      November 1
  • Poland Independence Day    November 11
  • Christmas Day                     December 25
  • 2nd Day of Christmas           December 26

Maternity Leave and Benefit: The allowance depends on the number of children born in one birth event. 20 weeks for one child; 31 weeks for twins; 33 weeks for triplets; 35 weeks for quads and 37 weeks for five or more children. The parent is allowed a maximum of six weeks’ leave before the due date. Benefit is calculated over the average salary for the preceding 12 months, at 100% for the first six weeks of leave and 60% for the remaining weeks, paid by the Social Insurance Institute (ZUS).

Paternity / Parental Leave and Benefit: Poland had to integrate the EU’s Work-Life Balance Directive into the Labor Code by August 2022, which covers employees with an employment contract. This stipulates two months paternity leave exclusively for the father, which replaced the previous allowance of 14 days. The father also has the option to take the entire four months of parental leave. Employees may apply for 32 weeks’ parental leave – 34 in the case of multiple births. Both parents can use the allowance simultaneously, in no more than four equal sections.

Discrimination: Article 32 of the Polish Constitution prohibits discrimination in social, political, or economic life. Employers must respect equal treatment for individuals performing the same duties, particularly in questions of gender. Direct or indirect discrimination is barred on grounds such as political, trade union or religious affiliations, gender or sexual orientations, age, disability, nationality, or ethnic origin.

Termination / Severance / Redundancy: Polish employment law applies strict regulations regarding termination of contracts, although contracts can be terminated by mutual agreement. Employers terminating contracts with immediate effect must provide written justification in a ‘termination letter.’ Employees protected from termination include those within four years of retirement; those on maternity, paternity, parental, childcare, or sick leave; those on vacation and trade union or works council members. Employee protection rules may require employers to notify trade unions of intended termination.

The employer may have to pay severance pay if:

  1. They terminate an employee’s employment contract either with notice or by agreement between the parties
  2. The reasons for the termination are credited to the employer
  3. The employer has at least 20 employees

Employees are entitled to severance pay of:

  1. One month's pay if they have worked for the employer for less than two years
  2. Two months' pay if they have worked for the employer for between two and eight years
  3. Three months' pay if they have worked for the employer for over eight years
  4. Severance pay cannot exceed 15 times the national minimum wage

There are also special procedures that apply to collective redundancies in terms of severance pay, which involve:

  1. 10 employees in companies employing fewer than 100
  2. 10% of employees in companies employing more than 100 but fewer than 300
  3. 30 employees in companies employing more than 300

Notice Periods: Probationers are subject to three days, one week or two weeks’ notice depending on the length of the trial period. Statutory minimum notice periods for fixed- and indefinite contracts are:

  1. At least one week if employed between one month and two years
  2. One week for each year if employed between two and 12 years
  3. 12 weeks’ notice if employed for more than 12 years

Improved terms can be agreed contractually or by collective agreements.

Health and Social Insurance: In Poland, the social security system consists of payments for old-age pension, invalidity pension, sickness and maternity insurance, insurance against accidents at work and occupational diseases, as well as health insurance. In addition, Poland has a system of family benefits, social assistance benefits and unemployment benefits.

Employers, employees and self-employed contribute to the system, with the employers withholding and remitting the employees’ contribution to the Social Insurance Institute (ZUS), in addition to their own percentage contribution of the employees’ gross salaries. As of tax changes introduced in January 2022 the contribution to health insurance by employees was no longer tax deductible.

13th Month's Salary in Poland

Salaries are paid monthly, by the 10th of the following month with no legal requirement to make a 13th month’s payment.

What Taxation Rules exist for Poland Payroll?

  • The tax year runs from January 1 until December 31
  • Returns are due by April 30 of the following year
  • Joint filing is permitted for married couples, depending on conditions
  • Residents are taxed on worldwide income, non-residents only on income sourced in Poland
  • Tax residents are those whose personal and economic interests are in Poland and who stay there for more than 183 days in a tax year
  • Non-residents are individuals whose personal and economic interests are not based in Poland and who live there for fewer than 183 days in a tax year
  • Taxable income from employment includes salaries, monetary compensation, bonuses, and benefits in kind
  • Income up to PLN 85,528 (€18,854, US$21,592) earned by persons under 26 years old is tax free, since August 2019
  • Other taxpayers have a tax-free allowance of PLN 30,000 (€6,636, US$7,566) as of changes introduced in January 2022
  • Payroll income taxes are generally withheld by employers and remitted to the authorities by the 20th of the following month
  • The employer files the employee’s return, detailing income and advance payments, although the individual generally undertakes final settlement
  • In January 2022, the Ministry of Finance changed the rules where employers collect advance payments for income equal to or less than PLN 12,800 (€2,820, US$3,230) per month

Where foreign companies intend to run payroll for their staff, they must follow these steps:

  • Apply for the employees’ Tax Identification Numbers (NIP)
  • Register employees with the Social Insurance Institute (ZUS)
  • Register employees with the National Statistics Agency (GUS)
  • Filing forms for remitting tax with the National Revenue Administration (KAS)
  • Compiling Personal Income Tax (PIT) returns comprising all income from employment, including bonuses and overtime, as well as benefits in kind
  • Filing PIT returns for employees where required, by April 30 of the year following the tax year

Income Tax: Liability for personal income tax is based on residency. Individuals whose personal and economic base is in Poland and who reside there for more than 183 days in a tax year are residents and are taxed on their worldwide income. Those who are not based in Poland and do not reside there for more than 183 days are non-residents and taxed only on Polish-sourced income. The tax year runs from January 1 until December 31 with returns and payments due by April 30 of the following year. The headline rate is 32% with a 4% ‘solidarity tax’ added to income exceeding PLN 1,000,000 (€220,200, US$252,400).

Social Insurance Tax: Employers and employees contribute social insurance taxes.

Employers contribute:

  • 16.26% of total gross salary, capped at PLN 157,770 (€34,750, US$39,835), to pensions and disability insurance
  • 1.67% of total gross salary (up to nine employees); 0.67% - 3.33% (more than nine employees with rate depending on the business sector) to accident insurance
  • 1.67 flat rate, generally, for foreign employers towards accident insurance
  • 2.45% of total gross salary to Labor Fund

Employees contribute:

  • 11.26% of total gross salary, capped at PLN 157,770 (€34,750, US$39,835), to pensions and disability insurance. As of January 2022, the 7.75% attributed to health insurance was no longer tax deductible
  • 2.45% of total gross salary to sickness insurance

Rules on other taxes:

Corporate Income Tax (CIT): The headline rate is 19% on taxable profits, with returns filed and final payments to be made within three months of the end of the tax year. Monthly CIT advance payments are made by the 20th of the following month. A rate of 9% applies since January 2020 to companies with revenue up to PLN 5,451,970 (€1,200,000, US$1,374,877). The lower rate can apply in some circumstances to start-ups launched since 2019. Companies are considered tax residents if their registered office and management are based in Poland. Changes announced in January 2022 proposed a new tax of 0.4% on large corporations. From January 2023 companies must present computerized accounts to the authorities.

Capital Gains Tax (CGT): There is no additional tax for capital gains above the regular 19% CIT rate.

Withholding Tax (WHT): The domestic rate for dividends is 19%, with 20% withheld on interest and royalties paid to non-resident companies or individuals. Lower rates can apply below a threshold of PLN 2,000,000 (€442,540, US$504,877) paid to single recipients in a tax year.

Value Added Tax (VAT): The standard rate is 23% applied to goods and services. A reduced rate of 8% applies to such as pharmaceutical products and transport services; 5% to such as books, journals, and some foodstuffs. Companies must register for VAT if their sales in the tax year will exceed PLN 200,000 (€44,014, US$50,437). Changes were proposed from July 2022 affecting tax groups, some financial transactions, and refunds.

Customs and Excise Duties: As Poland is a member of the European Union, only trade with non-EU nations is potentially subject to customs duties. Excise duties are payable on goods listed under Poland’s excise law and include energy products and electricity, alcohol and cigarettes, petrol, oil and gas and motor vehicles.

Other Taxes: Property Tax is fixed by municipalities; Transfer Tax may apply as percentage of certain civil transactions; Stamp Duty may apply to certain legal transactions; Capital Tax applies to increases in share capital to such as limited liability companies and joint stock corporations.

Avoid risks – make the right move

Poland’s complicated tax regulations demand expert advice for incoming foreign companies. Businesses cannot risk stumbling into mistakes over payroll and taxation, with the chance of fines and sanctions. Do not waste time worrying about your move into Poland – contact Bradford Jacobs now