Month: May 2025

On 15 September 2020, the Minister of Finance issued a General Interpretation concerning the application of the 50% tax-deductible costs to copyright royalties (no. DD3.8201.1.2018; Official Gazette of the Ministry of Finance of 18 September 2020, item 107). The content of the document clarifies, among other things, the rules for determining the amount of copyright royalties and the process of the transfer of copyright from the employee to the employer.

A statement on the Ministry’s website explains that, pursuant to Article 22(9)(3) of the Act of 26 July 1991 on Personal Income Tax, tax-deductible costs related to income earned by authors from the use of copyright and performers from related rights, as defined by separate regulations, or from the disposal of these rights, amount to 50% of the revenue earned. These costs are calculated from the income reduced by the pension, disability, and sickness insurance contributions withheld by the payer in the given month, provided that the income constitutes the basis for those contributions.

The aim of the issued interpretation is to outline the conditions which, when met, enable the application — including by the income tax payer (e.g. the employer) — of the 50% tax-deductible costs to income derived from the use or disposal of copyright by authors.

The conditions listed in the interpretation stipulate that, for the 50% tax-deductible costs to apply to income derived from the use or disposal of copyright and related rights, the copyright royalty must be clearly distinguished from other components of remuneration, and a work must be created within the meaning of the Copyright Act — i.e. a work that is commissioned, expected by the employer, original, and of an individual nature.

The fact of earning income from copyright and its amount must be appropriately documented, which may be demonstrated by any legally admissible evidence. Furthermore, the calculation of the copyright remuneration may be based on the time an employee–author spends creating the work. In such cases, the time spent on creative work must be recorded, along with documentation in the form of a register of created works.

A specific situation arises if the work is not created, and advances on tax for the royalty portion of the remuneration were calculated using the 50% tax-deductible costs — for example, if an employee leaves their job or a civil-law contract is terminated. A fundamental principle of income tax is the principle of self-assessment. Therefore, it is the taxpayer’s responsibility to correctly determine their income, account for tax-deductible costs in the proper amount, and calculate the tax due.

In such a case, the employer or other entity paying a portion of the due royalty is not obliged to correct the amounts of advances paid, since they were paid in the correct amount at the time (based on the assumption that the commissioned work would be delivered). Moreover, the employer is required to report in the annual PIT-11 statement the tax-deductible costs actually applied when calculating the tax advances.

However, if in the annual PIT-4R declaration the employer reported income applying the 50% tax-deductible costs (and the work was not created), then the correct amount of tax advances due was not reported, and the employer is therefore obliged to amend this declaration.

The interpretation also includes a reminder regarding the legal status of a work created by an employee. Unless otherwise stipulated by law or the employment contract, the employer for whom an employee creates a work in the course of their duties acquires the economic copyright to the work at the time of its acceptance, to the extent defined by the purpose of the employment contract and the mutual intention of the parties. This constitutes derivative acquisition via so-called cessio legis.

As a result, the economic copyright is transferred upon acceptance of the work. It should also be noted that there is a separate provision in Article 74(3) of the Copyright Act, apart from Article 12(1), which provides that the economic rights to a computer program created by an employee as part of their employment duties belong to the employer, unless the agreement states otherwise. Based on this provision, the employer acquires the full economic rights to the program at the time of its creation. This is a primary acquisition of copyright by the employer — meaning the programmer does not benefit from, nor dispose of, copyright, and therefore is not entitled to receive copyright royalties, which excludes the application of the 50% tax-deductible costs to the programmer’s remuneration.

However, under the aforementioned provision, the transfer of copyright between a programmer and their employer may be regulated differently in the employment contract. The Copyright Act allows the employer and employee to agree in the employment contract that the economic rights to a computer program created (or co-created) by the employee as part of their employment duties shall belong to the employee rather than the employer (Article 74(3)). In such a case, the general rule of derivative acquisition of economic rights by the employer in exchange for appropriate remuneration is reinstated, overriding the exceptional statutory provision granting the employer the primary acquisition of all economic rights to the program.

Therefore, in order to benefit from the 50% tax-deductible costs, it is necessary to modify the rules for the acquisition of copyright by the employer in the employment contract. To ensure the changes have been correctly implemented, it is advisable to seek professional legal assistance.

The Social Insurance Institution (Zakład Ubezpieczeń Społecznych, ZUS) has adopted a plan concerning key projects in the transformation process of the social security system and the ZUS itself for the next three years. During this period, their operations will undergo profound changes.

The President of ZUS, Professor Gertruda Uścińska, announced in her speech that the institution intends to provide support, reduce bureaucracy, and make it easier for Polish entrepreneurs to run their businesses. In a statement sent to the Polish Press Agency, ZUS declared that it will assume full responsibility for the settlement of employer contributions. Similar conclusions can be drawn from the plan adopted by the ZUS board regarding key projects in the transformation of the social security system and the institution itself over the coming three years.

As emphasised, the way the Institution and the entire social security system function will undergo a profound transformation during this period. The Social Insurance Institution plans to relieve entrepreneurs and employers of the obligations related to paying and settling contributions.

“Once the reform is implemented, settlements with ZUS will take minimal time and will not require advanced knowledge. This will help prevent errors, including those concerning the determination of the contribution assessment base. Entrepreneurs will have certainty regarding their settlements. Moreover, the introduction of the reform will positively impact the quality of data collected on the accounts of payers and insured persons within ZUS. This will allow for faster granting of benefits, pensions, and disability pensions due to a reduced number of explanatory proceedings. It will be maximally simplified. We want it to resemble the system for submitting a tax return. (…) I am confident that we will manage this task. We already have experience with large projects. We have previously introduced electronic medical certificates, the e-contribution system, and e-records. We also have the experience of the Anti-Crisis Shield and the Polish Tourist Voucher. All of this will yield benefits in the future,” assured the President of ZUS.

As of 24 October, further amendments to the regulations concerning the quarantine and isolation of employees came into effect, introduced by the Regulation of the Council of Ministers of 23 October 2020 amending the Regulation on the establishment of certain restrictions, obligations, and prohibitions in connection with the state of epidemic.

– The sanitary inspection authority (Sanepid) no longer issues decisions when referring individuals to quarantine.
– Mandatory quarantine for cohabitants has been abolished.
– The payment of sick pay/allowance will be based on data concerning individuals placed under quarantine or home isolation. There is no longer a requirement to submit Sanepid decisions or special declarations. The Social Insurance Institution (ZUS) will provide such information to payers via their online profiles.
– A person who tests positive for COVID-19 is automatically placed in home isolation, unless they are referred to an isolation facility or hospital.
– Professional and business meetings are permitted without participant limits.

On 16 September 2020, the Director of the National Tax Information (Krajowa Informacja Skarbowa) issued an Individual Interpretation (No. 0111-KDWB.4010.16.2020.1.MJ). It addressed the topic of reverse mergers of companies and the possibilities in this regard under the legal framework effective from 1 March 2020.

The interpretation indicates that a reverse merger, i.e., one in which the acquiring company receives—among the assets of the acquired company—its own shares that prior to the merger belonged to the acquired company, can be carried out in two ways:

1. With an increase in share capital – this procedure assumes:
 a. acquisition by the acquiring company of its own shares within the takeover of the acquired company’s assets, which should then be redeemed in a separate “redemption” procedure,
 b. an increase in share capital resulting in the issuance of new shares to be granted to the shareholders of the acquired company;

2. Without an increase in share capital – this procedure does not involve redemption of the initially existing shares or an increase in share capital with the issuance of new shares. Instead, the shareholders of the acquired company receive own shares of the acquiring company that it acquired as a result of the merger.

The content of the interpretation concerned the second of the presented variants. According to the tax authorities, the acquiring company is entitled to exclude from taxable income the value corresponding to the issue price of its own shares acquired from the acquired company during the merger. Article 12(4)(3e) of the Corporate Income Tax Act applies also to reverse mergers in which the acquiring company does not redeem its own shares acquired from the acquired company but transfers them to the shareholders of the parent company.

Furthermore, the Director of the National Tax Information indicated that when determining the issue price, reference should be made to the applicable terms for “subscription” of shares (stocks) relevant to mergers and divisions. These terms are set in accordance with the procedure prescribed in the Commercial Companies Code. As part of this procedure, a merger plan must be determined, including a detailed share exchange ratio (Article 499 §1 point 2 of the Commercial Companies Code). Thus, the value of the acquired company’s assets is expressed in terms of shares (stocks). The case of a reverse merger cannot be excluded from these obligations; therefore, in this situation, the merger plan and the exchange ratio must also be indicated, showing the valuation of the acquired assets. Consequently, in the case of a reverse merger, the parties to the transaction should also determine the “market value” despite the absence of actual issuance of new shares (stocks). Hence, in the indicated reverse merger, the value at which shares (stocks) are subscribed will be the value of the acquired company’s assets, which should be understood as the issue price.

Currently, a person subject to quarantine or isolation due to coronavirus is not required to provide a paper decision from the sanitary authorities (sanepid) to their employer or the Social Insurance Institution (ZUS), nor to have a medical certificate.
The information about the person being placed in quarantine or isolation, available in the PUE ZUS system, constitutes the basis for the payment of sickness allowance by the employer or sickness benefit by ZUS. This information is visible to the employer in the PUE ZUS system.

However, it may happen that this information is not visible in the PUE ZUS system. The absence of such information in the system does not exclude the possibility of applying for sickness allowance or benefit. In such a case, the person subject to quarantine or isolation should, within 3 working days from the end of quarantine or isolation, submit a special written statement to the employer or ZUS confirming the mandatory quarantine or isolation at home. The employer or ZUS will then request confirmation of the information contained in the statement from the sanitary authorities.

Nevertheless, an employee subject to quarantine or isolation should always contact their employer by phone or email and inform them of this fact. An employee in quarantine may agree with the employer to continue working remotely. The possibility of an employee in isolation – who is asymptomatic – performing work remotely is not clearly regulated in law, which results in different views on this matter.

If remote work is not performed, the employee is entitled to sickness allowance or sickness benefit. The condition for receiving sickness benefit from ZUS is to submit an application for its payment to ZUS. This application can be submitted via the employer through the PUE ZUS system. Upon receipt of the application, ZUS will verify the quarantine or isolation information based on appropriate data from the e-Health Centre’s IT system.

Moreover, since 3 November 2020, a person living with or sharing a household with a person infected with coronavirus is obliged to undergo quarantine. Such quarantine begins on the day the infected person receives a positive test result and ends 7 days after the infected person’s isolation ends. Sanepid does not issue a separate decision in this case. The basis for the payment of sickness allowance or benefit is a statement submitted by the insured person confirming the necessity to undergo quarantine. It is important that such a statement contains the following data:

1) the insured person’s full name,

2) the insured person’s PESEL number, if available,

3) the date quarantine begins and ends,

4) data regarding the person living with the insured or sharing the household who tested positive for coronavirus, i.e. full name and PESEL number if available,

5) the dates of commencing and ending mandatory quarantine or home isolation,

6) the insured person’s signature.

A template of such a statement is available on the ZUS website. If the sickness benefit is to be paid by ZUS, a separate application for benefit payment should be submitted (which can be submitted via the employer using the PUE ZUS system, as mentioned above). The employer or ZUS may request confirmation of the information contained in the statement from the sanitary authorities.

An employee may apply for care allowance if they care for a person in quarantine or isolation, i.e., a child up to 14 years old (or up to 18 years old in the case of a disabled child) or another family member. The basis for benefit payment in such cases is a special statement submitted by the caregiver (containing data analogous to the statement related to mandatory quarantine for a person living with an infected individual, but specifying the data of the person being cared for). A template for this statement is also available on the ZUS website. In this case as well, the employer or ZUS may request confirmation of the information contained in the statement from the sanitary authorities.

According to the judgment of the Supreme Administrative Court of 27 August 2020 (case ref. II FSK 3010/19), a company may deduct from its revenue the remuneration paid to a board member for monthly board meetings as well as remuneration under an employment contract, provided that the scope of the duties performed does not overlap. The Supreme Administrative Court held that remuneration paid to a board member for participation in meetings may be incurred for the purpose of generating revenue or maintaining or securing the source of that revenue.

In the case in question, the company included in its tax costs expenses related to remuneration paid to the CEO and Deputy CEO under two separate titles. According to the resolution of the extraordinary shareholders’ meeting, the amount of remuneration for each board meeting was determined at the meeting itself. The tax office head, and subsequently the director of the tax chamber in Gdańsk, challenged the tax settlement. The tax authorities held that the scope of the board members’ duties under their employment contracts did not exceed ordinary company management. The company filed a complaint with the Provincial Administrative Court in Gdańsk, which approved its position, finding that the analysis of the employment contracts and board meeting minutes indicated a different scope of duties. The case was then brought before the Supreme Administrative Court, which upheld the interpretation of the Provincial Administrative Court.

However, the Court emphasised that, as a general rule, expenses cannot be deducted twice. Therefore, it is essential that remuneration for participation in board meetings is not already included as part of the employment remuneration costs. The condition for including remuneration for participation in board meetings as a tax-deductible expense is, therefore, the non-overlap of duties related to participation with those performed under the employment contract.

Since the beginning of this year, there has been a fierce debate over the number of annual leave days between trade unions and employer organisations. Reports have also emerged of a directive being prepared by the European Union aiming to extend employee leave entitlements in all Member States. As one might expect, employers are strongly opposing the changes proposed by the unions, while the latter point out that Poles are among the longest-working citizens in the EU.

The All-Poland Alliance of Trade Unions (Ogólnopolskie Porozumienie Związków Zawodowych, hereinafter OPZZ) has put forward a number of proposals regarding the suggested labour law reforms. One of them is to increase annual leave entitlement to 35 days.

According to data from the Organisation for Economic Co-operation and Development (hereinafter OECD), Poles are not only among the longest-working, but also among the most stressed employees in the European Union. We spend as many as 1,792 hours at work per year. 27 per cent of Poles experience stress at work every day, which is linked to employers’ expectations of working during days off, for instance by checking emails or taking phone calls.

Under the current legal framework, there are two levels of annual leave entitlement per year: 20 and 26 days. The longer leave is granted to employees who have accrued 10 years of service. It is worth mentioning that years spent in education count towards the length of service. The number of years added to work experience is as follows:

• Vocational school – 3 years
• Secondary school – 4 years
• Technical college – 5 years
• Post-secondary school – 6 years
• Higher education – 8 years

The above periods are not cumulative.
According to the regulations, an employee who takes up employment for the first time acquires the right to leave at the end of each month of work, at a rate of 1/12 of the leave entitlement granted after a year of service.

At the same time, it should be remembered that annual leave is different from unpaid leave or, for example, maternity leave. These are subject to separate rules and calculation methods.

A statement regarding the organisation’s proposal has been published on the OPZZ website:

“In light of this, the current annual leave entitlements – 20 and 26 days – established several decades ago under completely different socio-economic conditions, absolutely do not guarantee proper rest and recovery for employees after a period of work. Nor do they serve to protect their health or restore their full capacity to work,” reads the OPZZ website.

The 35-day annual leave proposed by OPZZ would be granted to every employee, regardless of their length of service, level of education, or place of employment.

Meanwhile, employers opposing the proposed changes argue that extending leave entitlements would significantly increase employment costs and, consequently, have a negative impact on the entire labour market. Employees on annual leave are entitled to full pay, and employers must continue to pay social insurance contributions, income tax and other levies. In addition, there is the issue of accumulated unused leave, which poses particular difficulties for smaller businesses.

The new anti-crisis shield is already under deliberation in the Senate. The Act provides for a range of exemptions and subsidies for further companies operating in the domestic market. The changes affect not only specific industries but also have an impact on the provisions of the Labour Code in general. In connection with the introduced measures, the scope of inspections conducted by the Social Insurance Institution (ZUS) and other authorities supervising entrepreneurs entitled to support has also been extended.

Changes to employment law

By law, the deadline for updating employees’ medical examinations will be extended to 180 days from the lifting of the epidemic threat or epidemic state. Employers therefore do not need to worry in the near future about the consequences of employees’ periodic examinations expiring. The deadlines concerning employees not subject to initial medical examinations, as set out in Article 229 § 1(1) points 1 and 2 of the Labour Code, have also been extended.

These refer to individuals taking up employment with the same or another employer in a position other than administrative-office work within 30 days after the termination or expiry of their previous employment with that employer, provided that the conditions set out in the legislation are met. The new Act changes this 30-day period to 180 days.

Furthermore, initial medical examinations will not be required for individuals taking up administrative-office work, provided that they hold a valid medical certificate confirming no contraindications to working under the conditions described in the referral for medical examination, and the employer confirms that these conditions match those present in the new role.

 

Wage subsidies

Only certain sectors (based on prevailing activity) may qualify for financial support in the form of employee wage subsidies:

• Retail sale of clothing in specialised stores
• Retail sale of food, beverages and tobacco products at stalls and markets
• Retail sale of other goods at stalls and markets
• Restaurants and other permanent catering establishments
• Mobile catering establishments, e.g. food trucks
• Preparation and serving of beverages
• Film, video and television programme production
• Film screening activities
• Photography activities
• Rental and leasing of recreational and sports equipment
• Organisation of fairs, exhibitions and congresses
• Out-of-school sports and recreational education
• Out-of-school artistic education
• Out-of-school driver and pilot training
• Foreign language education
• Other out-of-school education
• Hospital activities involving spa treatment or inpatient rehabilitation as per the Act of 28 July 2005 on spa treatment and spa areas (Journal of Laws 2020, item 1662)
• Physiotherapy activities
• Paramedical activities
• Artistic performance activities
• Supporting artistic performances
• Cultural facility activities
• Museum activities
• Botanical and zoological garden operations and nature conservation areas
• Operation of sports facilities
• Fitness facility operations
• Other sports-related activities
• Amusement park and theme park activities
• Escape rooms, haunted houses, dance venues, and other indoor recreational activities
• Other entertainment and recreational activities
• Wellness services such as baths and saunas

Applications may be submitted until 28 February 2021 to the Regional Labour Offices – the procedure is similar to applying for funding. To receive the subsidy, revenue from activity (as defined by tax regulations) in one of the three months preceding the month of application must be at least 40% lower due to COVID-19 than in the previous month or the same month the previous year.
The support will amount to PLN 2,000 per employee’s wage and will be granted for a total of 3 calendar months.

Note: Employees employed for less than 3 months are excluded from the subsidy.

 

Previous standstill benefit

The group entitled to an additional standstill benefit under the existing tourism-related shield has been extended to include:

• Hotels and similar accommodation facilities
• Tour operators (tour packages and excursions)

To qualify, two conditions must be met:

• Receipt of at least one previous standstill benefit under anti-COVID measures,
• Revenue from activity in the month preceding the application must be at least 75% lower than in the same month in 2019.

One-off standstill benefit

A number of sectors (based on prevailing activity) will be eligible for a one-time additional standstill benefit:

• Retail sale of clothing in specialised stores
• Retail sale of food, beverages and tobacco products at stalls and markets
• Retail sale of other goods at stalls and markets
• Restaurants and other permanent catering establishments
• Mobile catering establishments, e.g. food trucks
• Preparation and serving of beverages
• Other reservation-related services
• Film, video and television programme production
• Film screening activities
• Photography activities
• Rental and leasing of recreational and sports equipment
• Organisation of fairs, exhibitions and congresses
• Out-of-school sports and recreational education
• Out-of-school artistic education
• Out-of-school driver and pilot training
• Foreign language education
• Other out-of-school education
• Hospital activities involving spa treatment or inpatient rehabilitation as per the Act of 28 July 2005 on spa treatment and spa areas (Journal of Laws 2020, item 1662)
• Physiotherapy activities
• Paramedical activities
• Cultural facility activities
• Museum activities
• Botanical and zoological garden operations and nature conservation areas
• Operation of sports facilities
• Fitness facility operations
• Other sports-related activities
• Amusement park and theme park activities
• Wellness services such as baths and saunas

Conditions for obtaining the one-off benefit:

• Only for entrepreneurs operating on 30 September 2020,
• Must have received the basic standstill benefit under the anti-crisis shield (Article 15zs),
• Revenue from business activity in October or November 2020 must be at least 40% lower than in the corresponding month of 2019.

The additional standstill benefit will be paid in the same amount as the previously received benefit (i.e. PLN 2,080 or PLN 1,300).

Note: ZUS has been granted the authority to verify the accuracy of data provided by applicants for the standstill benefit, so it is advisable to carefully verify the information included in the application.

Micro and small businesses

The new Act provides for a grant of up to PLN 5,000 to cover current operating costs for micro and small businesses (new Article 15zze4). Sectors eligible for support (based on prevailing activity) include:

• Retail sale of clothing in specialised stores
• Retail sale of food, beverages and tobacco products at stalls and markets
• Retail sale of other goods at stalls and markets
• Restaurants and other permanent catering establishments
• Mobile catering establishments, e.g. food trucks
• Preparation and serving of beverages
• Other reservation-related services
• Film, video and television programme production
• Film screening activities
• Photography activities
• Rental and leasing of recreational and sports equipment
• Organisation of fairs, exhibitions and congresses
• Out-of-school sports and recreational education
• Out-of-school artistic education
• Out-of-school driver and pilot training
• Foreign language education
• Other out-of-school education
• Hospital activities involving spa treatment or inpatient rehabilitation
• Physiotherapy activities
• Paramedical activities
• Artistic performance activities
• Supporting artistic performances
• Cultural facility activities
• Museum activities
• Botanical and zoological garden operations and nature conservation areas
• Operation of sports facilities
• Fitness facility operations
• Other sports-related activities
• Amusement park and theme park activities
• Escape rooms, haunted houses, dance venues, and other indoor recreational activities
• Other entertainment and recreational activities
• Wellness services such as baths and saunas

The grant may be obtained by submitting an application via the starost and fulfilling the following conditions:

• Holding the status of a micro or small entrepreneur,
• Revenue from business activity in October or November 2020 must be at least 40% lower than in the corresponding month of 2019,
• Grant not applicable to entrepreneurs who suspended operations on 30 September 2020,
• Business activity must be conducted for at least 3 months following receipt of the grant.

The starost may carry out inspections of micro or small entrepreneurs who received the grant within 3 years of the date of disbursement. The inspection may relate to proper use of the funds and appropriate documentation of expenditures.
Exemptions from contributions

The amendment expands the list of sectors exempted from paying contributions for July, August and September 2020 under the existing shield (Article 31zo(8) and (9) of the anti-COVID Act).

On 16 October 2020, the Supreme Court, in case no. IV CSK 107/20, submitted the following legal questions to be resolved by an enlarged panel:

1. Can a request to initiate settlement proceedings interrupt the limitation period of a claim, and if so, does the interruption depend on whether the creditor could reasonably believe — given the debtor’s conduct — that the conciliation proceedings might result in a settlement?
2. If a request to initiate settlement proceedings results in such proceedings being conducted, is it permissible, during the trial proceedings, to determine that the limitation period was not interrupted?

Case law concerning the issue raised in the first question generally supports an affirmative answer. However, there are critical voices in legal scholarship which refer to the requirement expressed in Article 123 § 1 point 1 of the Civil Code, stating that an act carried out before a court or other competent authority must directly aim to assert, determine or satisfy a claim. Proponents of this view argue that, in practice, the institution of requesting conciliation is often used merely as a tool to extend statutory limitation periods and not from a genuine intention to resolve the dispute amicably. The legislator has recognised this phenomenon and has attempted to limit it by significantly increasing the fee for submitting a request to initiate settlement proceedings.

The Supreme Court has emphasised that, in this context, it is particularly important to assess the conduct of the debtor and determine whether there was any real basis for the creditor to expect the possibility of reaching a settlement. The drawback of adopting such an approach is that it would indirectly allow the debtor to influence whether a request for conciliation results in the interruption of the limitation period.

The second legal question concerns the stage of proceedings at which an assessment should be made as to whether a request for conciliation was submitted solely to interrupt the limitation period. Such a finding could lead to the conclusion that the limitation period was not interrupted. However, there is uncertainty as to whether this evaluation should be made during the conciliation proceedings themselves or only at a later stage — during the main trial proceedings concerning the claim in question. In some Supreme Court rulings, it has been held that the absence of such a finding during the conciliation proceedings precludes its consideration in subsequent trial proceedings. In contrast, other judgments indicate that this assessment should be carried out during the proceedings in which the claim is pursued and in which the defendant raises the statute of limitations as a defence.

The Civil Chamber of the Supreme Court will resolve these issues sitting in an enlarged panel of seven judges. The ruling will have fundamental implications for addressing the widespread systemic practice of significantly extending statutory limitation periods. Given the positions taken in legal doctrine, existing case law, and the need for legal certainty, the Supreme Court’s evaluation will require thorough consideration of the future implications of its decision.

The Polish Ministry of Finance has published information regarding an agreement concluded between Poland and Germany on the taxation rules applicable to remote work performed by cross-border workers during the COVID-19 pandemic. This constitutes a significant simplification for employees, as the pre-pandemic taxation rules have been maintained.

Poland and Germany have entered into a mutual agreement concerning the application of Article 15(1) and Article 19(1) of the Double Taxation Agreement on income and capital. The document, signed in November this year, applies to the taxation of income earned by cross-border workers.

 

New rules

The agreement introduces a legal fiction for the purposes of applying Article 15(1) of the treaty. It is assumed that, due to measures taken by Poland and Germany to combat the COVID-19 pandemic, work performed from home (i.e. in the state of residence) by an employee on behalf of an employer from the other state may be considered as work performed in the state where the employee would have carried out their duties if no anti-crisis measures had been implemented. This solution significantly simplifies matters for cross-border workers. The taxation rules that applied prior to the outbreak of the COVID-19 pandemic remain in effect, despite changes in the factual circumstances that would otherwise justify a different treatment.

 

Who is covered by the provisions?

The agreement applies solely to those cross-border employees who, due to COVID–19, were assigned by their employer to work remotely — that is, from home in their country of residence.

 

The solution does not apply to:

• employees who performed remote work from their country of residence or a third country, and who would have done so regardless of the pandemic-related crisis, and
• employees who, under the terms of their employment contract, are obliged to work remotely from their country of residence.

 
Rights and obligations

Cross-border workers making use of this solution must apply it consistently in both countries and maintain appropriate documentation (i.e. written confirmation from the employer specifying which remote workdays were due solely to the measures introduced in response to the COVID-19 pandemic).

The provisions of the agreement apply only insofar as the corresponding remuneration for days worked remotely from home would, in fact, be taxed by the country in which the cross-border worker would have performed their duties if the anti-pandemic measures had not been introduced.

The legal fiction adopted for interpreting Article 15(1) also applies to income from public service, in accordance with Article 19(1).

The agreement is temporary and covers the period between 11 March 2020 and December 2020. It will be automatically extended month by month unless terminated by either of the countries.

 

The full text of the mutual agreement is available on the Ministry of Finance website:

https://www.podatki.gov.pl/podatkowa-wspolpraca-miedzynarodowa/wykaz-umow-o-unikaniu-podwojnego-opodatkowania/