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With a population of 38.57 million and a prime location in the middle of Europe, Poland is a major economic player. Poland, one of the larger eastern European nations, has surfaced from the communist rule to become an exciting market for global corporations to enter. For businesses operating in Poland, production, power, and heavy manufacturing have proven to be particularly successful, but many other sectors have grown as Poland develops pace with the fast connections with Western markets. The Polish Zloty (PLN) is Poland's official currency.
Poland's market economy is also dynamic and strong; it has grown steadily since the early 1990s and is expected to have a nominal GDP of $716 billion in 2022. Poland participates in the UN, NATO, and the OECD in addition to the EU, where it enjoys free trade with other members of the organization.
For payroll in Poland, the organizations must take into account payroll laws Poland & its particular set of compliance requirements, tax laws, and reporting limitations. There are many components in payroll processing in Poland. It consists of calculating wages, withholding taxes, filing taxes, and distributing payments.
Payroll Cycle & Working Hours in Poland
For payroll in Poland, employees must receive their salaries no later than the 10th of the following month because according to the Polish payroll cycle, the salaries are paid every month. According to payroll laws Poland, the maximum working hours in Poland are 40 hours (8 hours per day - 5 days per week). The typical workday runs from 8:00 until 16:00.
Payroll Tax In Poland
Payroll tax in Poland is the tax that an employer withholds from a worker's salary and then disburses the same to the government. This tax is used to fund various social security programs, including pensions, healthcare, and unemployment benefits.
The rate of payroll tax in Poland varies depending on the employee's salary and the type of social security program being funded. For example, the rate for pensions is 9.76% of the employee's salary, while the rate for healthcare is 9%.
In addition to the payroll tax in Poland, Polish employees may also be required to pay personal income tax on their salary or wages. The rate of personal income tax in payroll in Poland is progressive, meaning that it increases as the employee's income increases.
Social Security & Statutory Contribution for Payroll Tax in Poland
For payroll in Poland, social security contributions are paid by both employers and employees to fund various social security programs, including pensions, healthcare, and unemployment benefits. These contributions are collected by the Social Insurance Institution (ZUS), which is the government agency responsible for administering social security in Poland.
For payroll processing in Poland, about 35% of an employee's pay goes toward social security contributions, which are made by both employers and employees. The employment cost of the employee's gross pay ranges from 19.40% to 22.14% while there are individual caps in place. The employee cost is around 22.7%.
According to payroll laws Poland, the salary caps for pension and disability contributions are set at PLN 177,660 (2022). The employer does not make any contributions above this amount.
Employers must make the proper deductions from employees' payroll and submit the funds to the social security office of Poland by the 15th of the next month.
Employer Contribution (Employment Cost) to Payroll Tax in Poland (2022)
Employee Contribution (Employee Cost) to Payroll Tax in Poland (2022)
Payslips must separately calculate, account for, and show each type of contribution regarding payroll processing in Poland. The employee is also required to make a further healthcare contribution, which is determined as 9% of gross earnings less ZUS contributions. The employee and their family are eligible for free treatment through the Polish state healthcare system after contributing.
Employee Income Tax in Poland
For payroll in Poland, the financial year is from January 1 to December 31. In Poland, employees who have lived in Poland for at least 183 days during the tax year are required to pay personal income tax on their salary or wages. The rate of personal income tax in Poland is progressive, meaning that it increases as the employee's income increases. The personal income tax rate ranges from 12% to 32%, with higher rates applying to higher levels of income.
For employees below 26 years, annual income up to PLN 85,528 is exempted from income tax. When this threshold is crossed, the employer will start charging tax advances following the tax scale.
Every year, tax returns must be filed by April 30.
The employers should withhold income tax from employees' salaries and send the contributions to the tax office by the 20th of the next month.
Employee Income Tax Rate in Poland for 2022
For income up to PLN 120,000, the tax is 12% less the declining tax, which in this case is PLN 3,600 (i.e. 12% of PLN 30,000, the amount of income that is exempt from tax). If the income is over PLN 120,000, the tax is PLN 10,800 plus 32% of that extra amount.
