Employment of foreigners – salaries, taxes, and social security contributions

Employing foreign workers has become routine for many Polish employers. Growing labour mobility, persistent talent shortages and an increasing inflow of foreign nationals mean that the number of people working in Poland from abroad continues to rise year after year. For companies, this creates a complex compliance landscape: correct registration with authorities, accurate payroll calculations, proper tax treatment and appropriate social security contributions all require careful attention. Getting it wrong carries real financial and legal risk. Below, we outline the most important issues to address before — and immediately after — signing a contract with a foreign employee.

Tax Residency — the Starting Point for Every Payroll Calculation

Before any salary calculation, an employer must answer one fundamental question: is the foreign employee a Polish tax resident? The answer determines the scope of the individual’s tax obligations in Poland.

Under the Polish Personal Income Tax Act, a person qualifies as a Polish tax resident if they meet at least one of two criteria. First, they maintain their centre of personal or economic interests in Poland — meaning they have family, a permanent home or their primary source of income here. Second, they are physically present in Poland for more than 183 days in a given tax year.

A tax resident is subject to unlimited tax liability in Poland, meaning all worldwide income must be declared and taxed here. A non-resident, by contrast, is subject to limited tax liability — only income derived from Polish sources falls within the scope of Polish taxation.

In practice, the recommended approach is to obtain a written declaration of tax residency from the employee at the outset of employment. Where a non-resident invokes the provisions of a relevant double taxation treaty, a tax residency certificate should also be collected. These documents provide the legal basis for applying the correct tax rules and protect the employer in the event of an audit.

Calculating PIT Advances: Tax Scale, Flat Rate and Residency Certificates

For all employees who are Polish tax residents — regardless of nationality — the employer is required to calculate and remit advance personal income tax payments at the progressive tax rates of 12% and 32%, and to issue a PIT-11 form at the end of the tax year.

For non-residents, a withholding flat-rate tax of 20% is commonly applied, with the annual IFT-1/IFT-1R form used for reporting. A tax residency certificate can, however, change this picture significantly: it enables the employer to apply the provisions of the applicable double taxation treaty, which may result in a lower tax rate or even a full tax exemption.

KEY POINT

Every Polish tax resident — irrespective of nationality — is entitled, subject to submitting the relevant declarations, to the monthly tax-reducing amount (PLN 300 per month, equivalent to a tax-free allowance of PLN 30,000) and all other available tax reliefs, on the same terms as a Polish citizen.

PESEL and NIP — The Two Tax Identifiers Required for Correct PIT Filing

Annual income tax returns in Poland can only be filed using one of two tax identifiers: the PESEL number (for individuals not running a business who receive a PIT-11) or the NIP number (for those conducting business activity). There are no other identifiers that allow a valid annual return to be submitted to the tax office — this rule applies equally to foreign nationals.

It is therefore essential to collect the following information from a foreign employee at the time of hiring:

• PESEL or NIP number,
• address of residence in Poland,
• foreign tax identification number (TIN),
• declaration of tax residency or a tax residency certificate.

If the employee does not yet have a PESEL number, the employer should promptly inform them of the obligation to obtain one and explain the relevant procedure.

PRACTICAL NOTE

The former practice of entering “9999999999” in the PESEL field of a PIT-11 form is no longer valid. A return submitted with this placeholder will be rejected by the tax authority’s electronic system. Employers must ensure the correct identifier is obtained before submitting payroll documentation

Social Security and Health Insurance for Foreign Employees

The general principle is straightforward: contributions to social security and health insurance are payable in Poland for any work performed on Polish territory, regardless of the employee’s nationality. Exceptions exist under EU regulations or bilateral social security agreements.

Where a worker is posted to Poland for a period of up to 24 months, social security contributions may continue to be paid in the sending country — in which case ZUS (the Polish Social Insurance Institution) receives no contributions in respect of that individual. The A1 certificate serves as evidence of this status.

All foreign nationals who are subject to social security coverage in Poland receive ZUS benefits on the same terms as Polish citizens, including health insurance coverage. Citizens of EU and EFTA member states (Norway, Iceland, Liechtenstein and Switzerland) may also use the European Health Insurance Card (EHIC) for short-term stays in other EU/EFTA countries.

FOR NON-EU NATIONALS

Foreign nationals from outside the European Union who do not have a basis for social security coverage in Poland should independently conclude a voluntary agreement with the National Health Fund (NFZ) or take out a private health insurance policy.

Employee Capital Plans (PPK) — Obligations Towards Foreign Employees

Poland’s Employee Capital Plans (Pracownicze Plany Kapitałowe — PPK) apply to all employees regardless of nationality. Any person employed in Poland who is subject to mandatory pension and disability insurance contributions may participate in the programme. Participation is voluntary for the employee; however, the obligation to implement PPK rests with every employer — including foreign employers without a registered seat in Poland, provided they employ individuals who meet the statutory conditions.

An employer is exempt from the obligation to implement PPK only in a limited number of clearly defined situations: micro-enterprises (employing an annual average of fewer than 10 employees with net turnover or balance sheet total not exceeding the equivalent of EUR 2 million), but only if all employees submit a declaration opting out and no employee over the age of 55 requests enrolment. Entities that operate an Employee Pension Scheme (PPE) covering at least 25% of employees with a minimum contribution of 3.5% of salary are also exempt.

Conclusion — Building a Compliant Process

Employing a foreign national safely comes down to thorough documentation and a sound understanding of the applicable rules. An employer who collects comprehensive data at the onboarding stage — PESEL or NIP number, a declaration of tax residency, a residency certificate where applicable, and the employee’s foreign TIN — reduces compliance risk to a minimum. It is equally important to monitor changes in an employee’s residency status (particularly for longer-term contracts), track amendments to tax and social security legislation, and seek specialist legal advice when in doubt. Companies that manage these processes effectively protect themselves from costly penalties and build a reputation as reliable, compliant employers in the Polish market.