Tax, Social security, Labour Law
Apart from the effective tax planning, our integrated service offer includes tax and social/health insurance compliance from the moment of arrival of the employee to the moment of their leave from Poland (off-shore payroll, annual tax returns and any other necessary compliance).
Preparing for departure
For a migrating employee, leaving their own country involves – apart from the obvious need to organize such a leave – appropriate preparation of tax, social and health insurance matters.
During an assignment abroad the migrating employee is likely to suffer from a collision in between the home and the host tax and social insurance regulations.
As the best market practice, many employers are willing to provide their assignees assistance in meeting the host country’s compliance requirements. We are ready, able to and willing to assist you .
Therefore, we offer cooperation in the following areas:
Personal income Tax
We wish to provide you with our assistance with finding the most advantageous tax solutions for assigned employees.
In particular, in each case, we are ready to analyze the individual employee’s situation and offer to find the best possible assignment solution.
- Analysis and advisory concerning the possibility of tax planning related to employee’s assignment to a foreign country,
- Analysis of the cost advantages/disadvantages of “localization” of the employee,
- Planning of the assignment framework in accordance with the provisions of domestic and international tax law applying appropriate regulations of double taxation agreements,
- Analysis of assignee’s tax residency status in accordance with the Polish and international tax regulations as well as advisory concerning possible change of the residency status,
- Preparation of a hypothetical gross to net and/or net to gross cost estimation,
- An entry meeting with an employee assigned to work in Poland,
- An exit meeting with an employee assigned to work abroad,
- Advisory for employers, personal income taxpayers, concerning their obligations relating to the assignment of the migrating employees,
- Registration and de-registration for personal income tax purposes in Poland ,
- Preparation of monthly tax statements for employees assigned for work in Poland under international contracts, referred to as “off-shore payroll”,
- Settlement of currency exchange rate differences in case of payment of remuneration under split contracts, referred to as “split payroll”,
- Preparation of annual tax returns, including:
- Non-resident tax return,
- Resident joint or single tax return,
- Resident tax returns in Poland – tax credit method or exemption with progression method.
- Coordination of annual tax reconciliation and tax returns process in the home and host country,
- Preparation of “tax equalization calculation”,
- Preparation of hypothetical calculations of tax obligations for assigned employees,
- Representing the employees before the authorities (tax offices, Ministry of Finance),
- Tax certificate,
- Other confirmation from the Polish tax office required by the home/host country,
- Confirmation of tax paid in Poland,
- Confirmation of tax liabilities fulfilment in Poland,
- Legally binding ruling applications.
Each state has its own system of social security. For the migrating individuals, who may be liable to various insurance systems in various countries due to change of work place (assignment), it is important to have the certainty that their current benefits and future pension rights are planned properly.
Therefore, the aim of our service, in connection with tax advisory, is to provide you with optimal solutions under Polish and international social security regulations.
- Analysis concerning the possibility of social security planning related with employees’ assignment to Poland, to a foreign country (non-EU) or assignment to European Union (and Switzerland),
- Planning of the assignment structures applying of European Union regulations in connection with the coordination of the social security systems,,
- Analysis of the possibility of and benefits from participating in the voluntary social security insurance in Poland during the secondment abroad,
- Analysis of the possibility of the voluntary social security insurance in Poland during the secondment to Poland for employees who are not subject to obligatory Polish insurance,
- Advisory for both Polish and non-Polish employers, social security and health insurance contribution payers, in regard with their obligations arising from secondment,
- Voluntary registration into the Polish social security system of the employee seconded from Poland,
- De-registration from the Polish voluntary social security system of the employee seconded from Poland – after coming back,
- Registration of the other EU member state employer to the Polish social security system,
- Preparation of the agreement between the employee and the employer of taking over the “payer” responsibility for social security purposes,
- Registration of the family member into the Polish social security system,
- Monthly social security payroll,
- Confirmation from Polish social security authorities on insurance length in Poland,
- Confirmation from Polish social security authorities on contributions paid in Poland,
- Confirmation on insurance length and contributions paid in Poland,
- A1 application under art. 12 of the 883/2004 EU – secondment up to 24 months,
- A1 application under art. 13 of the 883/2004 EU – performing work in more than one Member State,
- A1 application under art. 16 of the 883/2004 EU – special procedure, agreement between two Member States,
- Certificate of Coverage (COC) application for non-EU Member State having Totalization Agreement with Poland,
- S1 application from the Polish health insurance system,
- Registration of S1 into the Polish health insurance system,
- European Health Insurance Card – EHIC based on A1,
- European Health Insurance Card – EHIC touristic,
- Prolongation of EHIC.
We will assist you in analyzing the correctness of the immigration, tax and social security compliance in the following areas:
Tax and social security audit (payroll)
The purpose of the analysis is to confirm the correctness of settlement of tax and social insurance liabilities, including observance of employer’s obligations as contributions payer.
In terms of assigned employees, the aim of the review is also to verify the applicable procedures, e.g. the methodology of non-collection of the monthly tax advances in case of assignment, exemption from the duty of payment of social security contributions in the country of assignment, etc.
In addition to the audit of the payroll, we will assess the tax risks and suggest methods for their reduction. Whenever possible, we will identify potential areas of tax planning and estimate possible savings to be generated.
Tax and social security audit (off-shore payroll so-called PIT-53)
The purpose of analysis regarding correctness of settlements covered by the PIT-53 statement, is to verify settlements concerning the personal income tax and social insurance contributions which apply to a natural person assigned to work in Poland under an international assignment contract. In this case, the host employer does not have any obligations as a payer.
Nevertheless, we are ready to provide you with analysis, assessment of the risk and advisory in the following area:
- Analysis of documentation based on which the employee is seconded to Poland (agreement between home and host companies);
- Analysis of the documentation constituting the basis for the employee’s receipt of additional benefits, e.g. apartment, car, etc…,
- Analysis of payment calculation for income tax advance payments, particularly important in the case of gross-up of remuneration,
- Verification of the social security obligations and correctness of calculation of social security contributions.
Immigration audit – legalization of work and stay
The aim of the immigration audit is to confirm that the Polish company, as employer and entrusting entity or hosting entity, meets all the legal conditions of employing a foreigner.
At the same time, as part of our analysis, we verify:
- Whether the actual work permit is adequate to the occupied position,
- Appropriateness of the employing entity,
- Territorial appropriateness,
- Permits deadlines.
In case of any misconducts, we will help you to take immediate necessary steps and actions.
Other advisory – incentive schemes
The incentive-based remuneration schemes (option plans) are one of the most popular elements of the art of business management, that is supposed to help to improve the efficiency of management of the entire organization.
Through activation of their proceedings, keeping the desired quality level and advancing growth of work efficiency, motivated employees guarantee improved financial results and strengthening of the market position for the company. As the final result, directly related with the commitment of the employees, the company gains competitive edge.
Since the Polish law provisions are not entirely clear how the stock option’s shall be taxed and tax authorities provide various, different interpretations, the employers are not always sure how to properly reconcile the “option income”. We are happy to support you in this area starting from planning of the best type of the “option plan” till the compliance moment.
We would like to provide you with our guidance and assistance with selected issues of the Labour Law, which are closely connected with aspects regarding the migration of the employees.
In particular, we are ready to provide you with our assistance in drawing up documentation and the development of the necessary procedures relating to employees’ assignmen.
- Analysis of the employer’s assignment policy and aligning it with/to the Polish law,
- In case the employer does have an assignment policy – assistance in creating one using the best market practice,
- Development or assistance in the development of an „Assignees‘ handbook” for assignees leaving Poland and/or coming to Poland,
- Comprehensive review and preparation of documentation covering the legal relations between assigning employers and the assignees:
- agreement between employer and the assignee for secondment – unpaid leave,
- secondment letter,
- analysis of the existing employment contract and input of necessary changes,
- Tax Equalization Policy – the development analysis and update of the existing tax protection policy for the assignees,
- assistance in development of compensation and benefits packages for the seconded employees.