Most of the posts on this blog focus on growing your business in the UK and self-employment in the UK. Today, however, we are going to look at a slightly different topic: employment in Poland by a UK company.
Can a UK company employ a worker in Poland?
The answer to the question in the headline is yes, absolutely. Employment in Poland by a UK company is perfectly permissible. There are two main scenarios to consider:
- A UK company operates in Poland through a permanent establishment.
- A UK company does not operate in Poland.
In the first scenario, the situation is straightforward. As the UK company has a permanent establishment in Poland, it is required to register with the Polish Tax Office and Social Insurance Institution (ZUS). It therefore has all the necessary tools to deal with employment matters in accordance with the standard Polish procedure.
Employment in Poland by a UK company not operating in Poland
The second scenario is a little more complex. As there is no business activity in Poland (employment alone does not count as business activity), the UK company is not required to register with the Polish tax office or ZUS.
However, the Convention for the Avoidance of Double Taxation applies. According to the treaty, an individual who is a tax resident of Poland pays taxes and social security contributions in the country of tax residence. The only exception is when a resident of one country earns income in the territory of another country (e.g. when a Polish resident works in the UK).
Employment in Poland by a UK company means that the employee is earning income in Poland. Therefore, taxes and social security contributions must be paid in Poland.
The employee employed in Poland by a UK company has to pay taxes and contributions
In the second scenario, the individual (employee) assumes responsibility for paying obligations to ZUS. They also make advance payments of income tax to the Polish Tax Office. This means that the employee receives a gross salary from the UK employer and is responsible for paying all the necessary contributions.
During the annual tax declaration, the employee declares all his income, the cost of obtaining the income (depending on the type of contract) and the amount of tax paid. If too much or too little tax has been paid, an adjustment is made (tax refund or additional payment). It is important that the transfer of responsibility for the payment of contributions and taxes is specified in the contract.
Employment by a UK company in Poland and tax obligations
To summarize, if the UK company operates in Poland, the same rules apply as with employment by a Polish employer. However, if the UK employer does not have a permanent establishment in Poland, there are some differences. In such cases, the employee:
- Acts as a payer of ZUS contributions,
- Independently makes advance payments of income tax to the Polish Tax Office,
- Calculates tax and contributions according to the applicable tax and contribution scale,
- Receives tax refunds and deductions for income-related expenses at the end of the year, rather than monthly.
