Last updated: 21.01.2025
What is Exit Tax in Poland?
Exit tax, also known as tax on unrealized gains, is a 19% tax imposed when:
- Assets are transferred outside Poland, causing Poland to lose its right to tax income from those assets while ownership remains unchanged.
- Tax residency changes, leading to the loss of Poland’s taxation rights over certain assets.
When does Exit Tax Apply?
Exit tax is triggered in situations such as:
- A Polish tax resident transferring assets to a foreign permanent establishment.
- A foreign tax resident moving assets from a Polish permanent establishment to another country.
- A foreign tax resident relocating the entire business of a Polish permanent establishment abroad.
Exit Tax Calculation – How to Determine Your Taxable Amount?
The taxable base for exit tax is calculated as the difference between the fair market value of assets on the transfer date and their tax value.
- If an entire business or an organized part is transferred, the tax base is calculated jointly for all assets.
- Market value is determined based on:
- CIT Act pricing rules (for securities and assets without significant functions/risks transferred).
- Transfer pricing rules (in other cases).
Exit Tax Reporting and Payment Obligations
To ensure compliance with Poland’s tax system, affected taxpayers must:
- File a tax return by the 7th day of the month following the month when taxable event occured (if the PLN 4,000,000 limit is exceeded).
- Pay the exit tax and submit a PIT-NZ declaration within the same deadline.
- For tax capital groups, exit tax income is calculated as the sum of all group companies’ income.
Installment Payment Option – Spreading the Exit Tax Liability
To mitigate financial burdens, Poland allows installment payments for transfers to EU/EEA countries, subject to:
- A maximum installment period of 5 years.
- The possibility of requiring security deposits if tax collection is at risk.
- Special monitoring obligations throughout the installment period.
Exemptions and Exclusions from Exit Tax
Polish tax law provides specific exclusions from exit tax, ensuring that certain asset transfers do not trigger exit tax liability. One of the key exemptions applies to assets temporarily transferred outside Poland for a period of up to 12 months.
Such transfers remain exempt when they are made for liquidity management purposes, used as collateral, or required to meet EU capital requirements for credit institutions and investment firms. These exclusions ensure that businesses and individuals can continue financial operations without immediate capital gains tax consequences.
In addition to temporary transfers, Polish law exempts assets transferred to public benefit organizations from exit tax obligations. This ensures that transfers aimed at serving a public purpose rather than generating capital gains are not subject to taxation.
Similarly, assets used by employees for business purposes, provided they do not constitute fixed or current assets, are also excluded from exit tax liability. This allows employees to continue using such assets in their professional activities without triggering additional tax burdens.
These exclusions play a crucial role in ensuring tax compliance and minimizing unpaid taxes for both businesses and individuals. Understanding these tax obligations is essential for proper tax planning and maintaining compliance with Poland’s tax system.
FAQ – Exit Tax in Poland
What is exit tax and when does it apply?
Exit tax is a 19% tax on unrealized capital gains, triggered when assets or businesses are transferred abroad, or when a tax residency change results in Poland losing taxation rights.
How is the taxable amount calculated?
The net gain is the difference between the fair market value of most assets on the transfer date and their tax value, based on CIT Act or transfer pricing rules.
What are the tax obligations for exit tax?
Taxpayers must file tax returns and pay taxes by the 7th day of the month after the taxable event if the PLN 4,000,000 limit is exceeded.
Can exit tax be paid in installments?
Yes, for most expats transferring assets to EU/EEA countries, with a five-year maximum period and possible security deposits.
What are the main exit tax exemptions?
Exemptions apply to temporary transfers (up to 12 months), public benefit organizations, and certain business-purpose assets used by employees.
What financial strategies can help reduce exit tax liability?
Critical aspect is strategic planning with a tax professional can help potentially mitigate exit tax by using tax deferred accounts, structuring investments, and managing capital gains.
Long-term residents and covered expatriates can explore treaty benefits, gifting assets, and deferring worldwide income through deferred compensation items. Proper use of funds, and specifically designed accounts may lower the net worth subject to deemed sale tax on the expatriation date.