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US-Poland Double Taxation Treaty

US-Poland Double Taxation Treaty

The income tax convention

The United States and Poland have signed a double taxation treaty in January 1974 in order to prevent double taxation for individuals and companies that produce income in both of the countries. The convention was signed at Washington on October 8 1974.

The convention between the United States and Poland has the purpose to avoid double taxation and prevent fiscal evasion with respect to income. The tax treaty mainly covers federal income taxes in case of the US and corporate and income taxes in case of Poland. 

Our Polish law firm can give you detailed information about how this treaty can influence your income of you are doing business in both countries.

Taxes covered by the treaty

The double tax treaty between the United States and Poland applies to the income taxes imposed by each of the contracting states. For Poland, the taxes concerned are:

– the income tax;

– the tax on wages;

– the surtax.

For the United States the taxes are those federal income taxes as described in the Internal Revenue Code. The Convention will also apply to any taxes that are imposed in addition to the ones named above or in place of the existing taxes. The two states are obliged to notify one another if there are any changes to their tax laws.

If you are an American investor in Poland, our Polish law firm can provide you with complete details about taxation in Poland and fiscal obligations for companies and individuals earning profits in the country. 

General rules for taxation 

According to the Convention, a business established in one of the two countries is subject to taxation by the other country only to the extent that the profits are attributable to a permanent establishments in that other country. Employees who work for a company in one of the two countries are not taxable by the host country on their personal income unless they spend longer than six months producing income in the host country during one tax year.

A company or individual can be considered a resident of both Contracting States if certain conditions are met. A resident of one of the countries may be taxed by the other country on any income produced in that Contracting State and only on the income produced within that state. For example, permanent establishments (fixed places of business) like Polish branches of American companies can only be taxed on their Polish source income.

Our attorneys in Poland can tell you more about the taxation of business profits and the taxation of dividends, interest and royalties as described in the double tax treaty between Poland and the US.