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What Is the U.S.-Poland Tax Treaty?

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The U.S.-Poland tax treaty was signed in October 1974. Since then, the two countries have enjoyed a fruitful business relationship, which has strengthened throughout the years.

According to a report by the American Chamber of Commerce and KPMG, the United States is the second most crucial investment capital source in Poland. Since the 1990s, the value of U.S. investment in Poland has reached $62.7 billion.

What is the U.S.- Poland tax treaty?

The U.S.-Poland tax treaty allows U.S. companies to access the Polish market without paying taxes to both countries. The income tax convention between the U.S. and Poland prevents fiscal evasion on different taxes in both countries.

  • United States: federal income taxes as described in the Internal Revenue Code
  • Poland: corporate, surtax, and income taxes

In February 2013, the U.S.-Poland tax treaty was replaced with amendments to the scope of the taxation of royalties, dividends, interest, revenue from immovable property, definitions in the treaty, and the exchange of information.

How does taxation work under the U.S.-Poland Tax Treaty?

According to the income tax convention, a business headquartered in one of the two countries may only be taxed if the profits in one country can be attributed to a company established in the other country.

Employees working in one of the two countries cannot be taxed on their income by the host country unless they spend more than six months working in that country.

According to the U.S.-Poland tax treaty, a company or individual can be considered a resident of both countries under certain conditions. However, a resident of one of the two countries may be taxed by the other country, but only on income produced within that country.

[bctt tweet=”Employees working in one of the two countries cannot be taxed on their income by the host country unless they spend more than six months working in that country.” username=”globalpeo”]

What are the benefits of doing business in Poland for U.S. companies?

Location: Comfortably located in central Europe, Poland is near major business hubs such as Paris, London, Zurich, and Munich.

Economy: Until the global pandemic, Poland had not experienced a financial crisis in 28 years. The European Commission and The World Bank estimate that Poland’s GDP will decline by 4.3 percent towards the end of 2024. In comparison, the average eurozone GDP decline is estimated at 9.1 percent. The Polish market is among only three European markets expected to recover its pre-pandemic GDP by the end of 2021.

Talent: Information technology (IT) talent will be essential to companies’ success in the future. According to Hacker Rank’s Developers Skills Report, Poland ranks fourth on programmer skills, with over seven percent of programmers learning to code before the age of 10. U.S. companies looking for tech talent have plenty of reason to look towards the Polish market since over 80,000 Polish students enroll in software development programs every year.

What is the current state of U.S. companies in Poland?

According to KPMG, there are more than 1,500 companies with U.S. capital operating in Poland. It’s not only about the number of companies, but the size. Every fifth U.S. company is considered large, with over 250 employees.

How can your U.S. company access the Polish market?

The traditional method of taking your company global involves setting up an entity through a Polish branch or subsidiary. However, this method may take an extended amount of time, maybe more than your company can afford. Recruiting and hiring in Poland can be easier with a partner like an Employer of Record (EOR), which can help you handle payroll, taxes, benefits, and HR functions in Poland.

Read more about hiring in Poland in Globalpedia.

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