A very taxing time

By, or on, the last day of April everyone who is part of the Polish system of taxation must submit their PIT-37 annual tax return form to the Urząd Skarbowy and pay them whatever money is due. Popular belief is that if you don’t do this you will be banged up in the nearest prison or have your head removed and displayed on a pole outside the nearest U.S office. At any rate, the consequences are said to be dire and so nobody has ever bothered trying.

I’m proud to be a fully nationalised foreign type paying entirely correct Polish taxes according to the same laws as all Poles. This makes life simple, but expensive. Expensive because the highest rate of tax is 40% (plus all the ZUS payments on top making total deductions more like 45%!!!) and because the highest rate is applied on any earnings above 85,528 PLN per annum. By contrast, the highest rate of UK tax is also 40% but this is not applied until you pass the 160,000 PLN mark (and that figure is artificially low now thanks to the exchange rate). Furthermore, between 44,490 – 85,528 is taxed at 30% in Poland and below that at 19%. In the UK everything below 160,000 is at 20%. In Poland, you can earn a whopping 3,090 PLN before you pay any tax, in the UK you can earn 25,000 PLN. Child allowance for Zosia in Poland is 1,145 PLN, in the UK this would be over 4,000 PLN.

As a general rule, I would expect about 35% of my income to disappear in the UK versus more like 45% here. If you take into consideration what you get for your money…..well…..don’t, because it’s not a pretty picture.

I think it is fair to say that the tax levels in Poland are starting to look very silly and need to be changed. The very wide diversity of income levels does not make it easy, but there are plenty of ‘normal’ Poles, in Warsaw at least, who are earning enough to reach the highest levels of tax after only 3-4 months. At the same time, there are many who, like my wife, will work their arses off the whole year and never leave the 19% bracket. Tusk was talking about a flat rate of 15%, promised to make this happen as far as I recall. Frankly, although I wouldn’t be complaining, I think this is going too far. I’d be more than satisfied with 25% flat rate or with a serious overhaul of the tax bands such that the higher rates don’t come in until much later. We’ll have to wait and see what happens. At the moment nobody seems to be doing anything about revising the tax system at all, so I’ll continue to pay very considerable amounts each month for things I mostly don’t use or on which I see no investment being made to improve them.

Still, all this does give me plenty of opportunity to take part in the annual PIT fiasco. Coming from the UK system, the Polish way is a bit of shock to the system. I’m not used to having tax deducted every month but then having to recalculate it all at the end of the year with a high degree of certainty that you will find you have not paid enough! I find it very strange that one’s employers are not able to get it right each month and that you’re left with this end of year black-lottery where you finally discover if you have put enough cash away to pay the tax man.

The PIT-37 is a round-up of all and any PIT-11 documents you might have collected during the year, you would normally have one from any employer as well as any other relevant documents. For example, I got one this year from the bank declaring the whopping 74 PLN of interest I earned. You can declare your tax as an individual or, as in my case jointly with my wife. This year is slightly complicated for us as we have three PIT-11s, two for me because I changed jobs in 2007 and one for my wife.

Changing jobs was interesting and most people know that this spells trouble come the day of reckoning. The reason is that the new employer has to start taxing you from the beginning of the scale – zero, then 19, then 30 then 40. For some obscure reason, they cannot look at your PIT 11 from previous employer and start you off with the correct deductions. Don’t ask me why. Therefore, you are guaranteed to be paid too much and end up with a considerable burden the following April.

I have a deeply rooted phobia of anything to do with taxes or officialdom of any kind. I am therefore completely useless at times like this. No matter how simple the documents might be I just stare at them or throw them in a dark corner and hope they go away. Of course, they don’t go away and so I have to seek help. This year I tried two methods. I firstly asked someone at work to help out and they came back with numbers that I owed the tax man that put me into a state of shock for about three hours. On further investigation, she had added the numbers incorrectly and the situation got better, but still didn’t seem right as there was little difference between going solo or joint. In our case, the general rule is that making a joint declaration saves quite a lot of money, so to be the same amount seemed wrong. I therefore went to a proper accounts office and they have come up with much more convincing numbers, albeit still more than I expected. In true Polish style, the document I have from the bank about my 74 PLN is the wrong one and so I have to bugger around getting that changed to account for approx 5 PLN extra tax I should be paying! Otherwise, all I have to do now is sign the papers, post them to the U.S (registered post) and then transfer them the entire contents of my bank account. Lovely month, April. Great system!

There is only one thing that makes the whole system bearable. You can donate 1% of what you pay to a charity. This year we’re sending our 1% to the Fundacja Spełnionych Marzeń.

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35 thoughts on “A very taxing time

  1. […] I know what some say. Due to the state’s red tape, inertia, stupidity, inadequacies – those charity orgs are more efficient. Well, I could buy that, but react from the other side: […]

  2. darthsida says:

    What a coincidence, Scatts! :) I’ll leave reading you for later. (But I spotted an error yet, in the first sentence: is “must submit”, should be “has to submit”. I mean, come on!)

    [Comment post-edited:]
    No, I read it all, too good to be left for later.

    — The line I hate most:
    there are plenty of ‘normal’ Poles, in Warsaw at least, who are earning enough to reach the highest levels of tax after only 3-4 months

    — The line I love most:
    You can declare your tax as an individual or, as in my case jointly with your wife

  3. Anonymous says:

    Only a quarter of a million people in Poland pay income tax at the highest rate. The simple fact is that you are very wealthy. Comparisons with England are meaningless.

  4. scatts says:

    Ha ha! I was meaning to tell you about me and your wife but, you know, I wanted to do it face to face! :) (I shall have to edit that one, I’m afraid)

    “Normal” Poles. Yes. Hard to explain without wasting a lot of time but suffice to say I used the word ‘normal’ to suggest that they were not special cases. They constitute a pretty healthy percentage of people who are not teachers, doctors, psychologists, ministry workers, policemen etc and so on. By normal I mean, well, regular guys and gals with an education with no special treatment working hard in normal jobs here in Warsaw. It is absolutely not unusual to see salaries in the 15-25,000 / month range these days. Obviously most of my experience is in my own industry and these people are in demand but I have similar experiences talking to friends in other industries too. I’m sorry if this contrasts badly with your experience, or other cities, or even the whole of Poland but that’s the way it is and I did say “in Warsaw”.

    On the English lesson. There are people better qualified here to comment on this, you may be one of them, but I would agree with “has to” in the case below. In the way I actually constructed the sentence, I’m happy with “must”.

    “By, or on, the last day of April everyone has to submit their PIT-37 annual tax return form to the Urząd Skarbowy…..”

  5. scatts says:

    “Comparisons with England are meaningless.”

    Assuming your numbers are correct – Not for 1/4 million people, not for the other 1/4 million (at least) who would pay higher rate if they didn’t cheat or use every trick in the book, nor for the many (1 million or more?) Poles now working in the UK, nor for anyone considering leaving Poland, nor for anyone who is staying with the hope of becoming more wealthy as the country develops.

    Might be meaningless for you, but I’m not writing this for you alone.

    I don’t consider a salary of 19,000 GBP per annum to be “very wealthy”. Not from a European perspective, which is after all, where Poland is supposed to be heading? I also think you might be pleasantly surprised at how quickly 7,132 / month becomes “nothing special” and then your figures will be WAY out.

  6. darthsida says:

    Scatts,
    sure your command of English has a higher-ranking officer than mine. It’s just I was taught, excepting exceptions, that must’s stand for obligations come from within you, whereas have to’s refer to things imposed on you by others, outside factors. I was curious whether your use of “must” was that conscious – or was it accidental. Anyway, the error was never grammatical, but rather mental, if I may so put it (and always IMO only).

    “Normal”:
    true, narrowing down (‘Poland’ => ‘Warsaw’ => ‘Warsaw, X industry’) we can come to a one-element group ‘Warsaw, X industry, Mr Normal’. But to speak generally, use medians. Yes, it can be the median for Warsaw earnings. [Over 85.528 zł in 3-4 months starts from ca 21.400 zł gross a month.]

    PS And keep your editing hands away from my wife! :)

  7. Kinuk says:

    Hubby was told at work that next year’s tax rates will be 19% and 32%, with the 40% tax scrapped. If that proves true, you will find us running through the streets of Warsaw singing with joyful abandon. But I’m not holding my breath on that one.

    I don’t even want a flat tax rate. Just one that is reasonable. 19% and 32% is much more reasonable. Especially if ZUS continues to stop after you reach 70-something thousand.

    But the whole “you haven’t paid enough tax” thing is frustrating to anybody we’ve ever spoken to about this. I know it’s all to do with thresholds and not passing one each month and blah blah blah blah Polish bureaucracy mumbo jumbo. Still. It’d be good if the people in accounts at work would subtract extra the next month or something.

  8. Anonymous says:

    “…serious overhaul of the tax bands such that the higher rates don’t come in until much later.”

    The higher rates already do come in very late. Just not late enough for those who have to pay them.

    Most state university department heads would not fall under the higher tax brackets unless they had second and third jobs.

  9. scatts says:

    To be honest, I’d be shocked to discover that state university department heads got beyond 19%, let alone 30 or 40.

    Darth, I’ll bow to your superior knowledge of correct English grammar. It’s not really something I’m very good at, nor want to be good at. I shall however, reserve the right to use the language as I wish to, irrespective of any rules someone might wish to impose on me.

    Kinuk – 19 & 32 would be fine and just how good it is will depend on where one becomes the other. I’m not holding my breath though.

  10. […] writes about the Polish taxation system: “There is only one thing that makes the whole system […]

  11. […] writes about the Polish taxation system: “There is only one thing that makes the whole system […]

  12. darthsida says:

    I have a problem with understanding some words. No, not normal (= described by medians). Other words.

    Scatts says “19 & 32” would be fine. Kinuk wants a tax that’s reasonable. But when does a tax become fine or reasonable? Is this against any calculations? Were there comparisons made? To rates of which country, and why that one? If it should be just just-thinking, then why 19 & 32 brackets — not 15 & 44? Or 2 and 69? Or Pi, 007 and 101?

    The classic Andrzej Lepper would say that people should live in dignity or that the workers should earn fair. I could not twig those either.

  13. guest says:

    darthsida you seem to be a genius in creating problems/(useless questions) and making things complicated.

  14. Datblog says:

    Aha the inevitable tax position. Poland should have gone the route of a flat tax many years ago but failed to grab the initiative.

    The current Government came to power on the promise of a two tier system in 2009 and single tier in 2011 of circa 19% – mass euphoria all around. But unfortunately there was no sound policy behind this, mainly well intentioned words.

    Frankly with a growing deficit, ridiculous currency position and Europe’s second largest nationalized industry (i.e. major burdens on the economic state) it is rash to think that a single tier tax is achievable, even a 2 tier is wishful thinking given the current woeful economic planning.

    On a personal note I have been in the top echelon of tax payers for 20 years in several countries, the most friendly was Norway, despite a 56% base tax, for the ability to offset costs, loans, charity donations, stock losses, etc. But then it is one of the world’s wealthiest countries!

    The UK’s tax return system sucks big time, Holland’s is a nightmare, don’t get me started on France – Poland’s filing system is a blessing, far less complicated in comparison to the last 3 I mentioned.

    In respect to the rate of tax in Poland – if you don’t like it pack your bags and see what your taxes get you in the UK, my sister who has private education for the children, private medical, etc. etc gets very little for her top rate tax payments (earning > 1 million sterling per annum), but she accepts that her taxes go to other costs, such as policing, military, nice foreign office embassies, government balls, etc.

    Hmm – where’s the perfect place for taxes – simple, wherever you are happiest…..for me it is in Poland so I am happy to pay my top rate.

  15. guest says:

    Your sister earns more than a million sterling per annum ? wow.

  16. Datblog says:

    Bizarrely enough she’s very happy too

  17. guest says:

    victoria backham ?

  18. scatts says:

    Beckham, naaa. Finance is my bet. Money makes money and Dat seems to be well educated in such matters so why not his sister too.

    Dat. I’m happy here, no intentions of going anywhere else for tax or any other reasons. I just don’t see where the Polish tax money is being spent. Most visible improvements are either private or EU money these days.

    You say your sister doesn’t get much for the amount she pays but at least she has good roads, bridges, tunnels, a better health service (to not use), flat pavements, better distribution of media infrastructure, more street lights, far better museums, security systems and as you mention, police, military, assorted pomp and pageantry, etc and so on.

    A few well managed privatisations and a two tier system would be a good start.

  19. guest says:

    EU money is only a part of the whole investment. Poland still needs its own money to build new infrastructure, because the EU does not give you 100% of the money you need. So maybe your taxes go there….

  20. scatts says:

    I’m sure some of it does go “there”, but where is “there”? The potholed streets of Warsaw? The invisible Warsaw ring road? The non existent development around Pałac Kultury (or anywhere else in Warsaw)? The delayed (never to be seen) new museum of modern art? The invisible high speed train lines?

    Where is my money going?

  21. guest says:

    scatts you are so harsh and unfair ! :D :D :D

    Warsaw is like a woman ,and the last thing you should do as an english gentelman is telling her that she is an ugly old stinking frump with no legs and no **** , !

    WTF ! ? lol.

  22. michael farris says:

    “It’s just I was taught, excepting exceptions, that must’s stand for obligations come from within you, whereas have to’s refer to things imposed on you by others, outside factors.”

    I have to admit I’d never heard that one before.

    For this native speaker of American, ‘must’ is more restricted to writing and sounds more formal while ‘have to’ is generally preferred in speech except for some set expressions and when ‘must’ means ‘I can’t think of another explanation/possibility’, as in ‘she must have left already’.

    I think ‘must’ also has gnomic functions which fits with scatts usage here.

  23. Ben says:

    Another reason to go self-employed – you control how much you pay yourself as a salary and therefore what tax bracket you are in. There are other ways to pay yourself the remainder and a good accountant will advise you.

  24. Datblog says:

    Scatts we are on the same page!

    I find the Governments Economic policy abysmal, as I said the deficit (debt) is growing significantly and until a sensible privatisation policy is actually implemented to reduce some of the burden single digit tax is a fairy store that would only be implemented by crass stupidity (harsh enough?).

    The Government and opposition spend far too much time squabbling over gay rights, abortion, religion (whilst of course important subjects) they do not, nor should not take precedence over the economic viability of a nation. Bah humbug….

  25. scatts says:

    Ben, life’s too short to spend it with accountants and I’m weird enough to prefer a simple, reasonably hassle-free life to having more money in my pocket. :)

  26. darthsida says:

    => Michael and Scatts

    Since the English language pays my rent – I really have to ask questions how it’s changing — and whom to ask if not native speakers? [So just for history’s sake, Michael Swan, Practical English Usage, OUP, 1990 [20th impression], page 394, QUOTE, verbatim:]
    Must can be used to give strong advice or orders, to oneself or other people.
    ……I really must stop smoking.
    ……You must be here by 8 o’clock at the latest.

    Generally, when must is used, the obligation comes from the speaker (as in two examples above). If we talk about or report an obligation that comes from ‘outside’ (a regulation, or an order from somebody, for example) must is possible, but have to is more common (see 285).
    …..I have to work from 9.00 a.m. till 5.00 p.m.
    UNQUOTE]

    => Guest,

    Why do you think questions about how much should our taxes be are ‘useless’? Ever wondered where 19, 30, 40 come from?

  27. michael farris says:

    darth,

    I did some quick googling and remain unconvinced. I suspect one of three things:

    1. this may have been part of British usage at one time (maybe still) but has been lost in American.

    2. This is linguistic folklore. Rather unlike the situation for most European languages, often English grammar ‘rules’ were written by people who were unqualified and/or crackpots who often made stuff up (like the old will/shall rule where a small kernel of truth ‘shall’ is more likely to occur with first person’ was ballooned up into an intricate ‘rule’ that no one ever followed).

    3. some combination of 1. and 2.

    You might consider writing to one of the mavens at languagelog, who might be able to shed light on whether this rule was/is followed anywhere. It’s just the kind of thing they really get into.

  28. scatts says:

    Darth, I sympathise, I really do, with anyone trying to bring the English language down to size by applying rule books. It’s just not a language that likes rules.

    I’ll say again before I start; I don’t know what the rules are, if I follow any of them it is by complete accident and I actually prefer breaking any that I do know. I don’t know how to explain anything in linguistic terms. But. As you show an interest.

    “I really have to ask questions how it’s changing” – I would have said “I really must ask about how it is changing”. Notice, there are even decisions to be made about where to use “it’s” and where to go with “it is”. I’m sure there are no rules about that, just personal preference. In my case it is more about how it flows, the rhythm so to speak.

    “I really must stop smoking.” – I like that one, but it needs the “really”.

    “You must be here by 8 o’clock at the latest.” – Interesting one this. In my opinion it is stronger to say “You have to be here by….” in speech with an emphasis on the word “have”. If you really want to get your point across, you need another word, “You simply have to be here by….”, “You absolutely have to be here by….”. You can obviously come at this from the other direction which would also be stronger, “If you’re not here by eight, you’re screwed.”. To me, your statement using “must” is actually quite weak. Strange as that may seem.

    “I have to work from 9.00 a.m. till 5.00 p.m.” – Hmmm. This is one where your rule might make some sense but it is also one where I need to know what follows this short statement to be able to get it right. For example, as you have written it, it suggests to me that this is not only a bland statement of working hours, but that there is something more to be known about why you have to work those hours.

    For a bland statement of working hours I would write “My hours are 9-5”, “My contract is to work from 9-5”, or even “I’m supposed to work from 9-5”.

    These alternatives also make sense to me but you’ll see they need to be longer:

    “I have to work from 9.00 a.m. till 5.00 p.m, but I could meet you in the pub at six.”

    “I must work from 9-5, otherwise my boss gets angry.”

    “I must work from 9-5 to earn enough to feed the baby.”

    “I have to work from 9-5 because I’ve got a report to finish but…..”

    Interesting, this “have to” thing seems to want me to give it a “but” or a “because”.

    Don’t ask where all this comes from, I have absolutely no idea! ;)

  29. Datblog says:

    In legal terms when ‘Must’ is used in a contract it is a legally binding term as in ‘the buyer must pay the seller’ but if the contract states ‘the buyer should pay the seller’ then the law is rather flexible. In conclusion Must is a definitive, other terms are ambiguous.

    Ambiguous enough for you?

    On a personal note I believe strongly that pronunciation and vocabulary are far more important than Grammar in spoken English, grammar has more importance in writing. Even though I went to a grammar school I hate grammar and still think that learners of spoken English would do better learning pronunciation and vocabulary first instead of the cock-handed approach of grammar first, which is far too confusing for the majority of people. Remember how we all learn to speak in the first place as children – yep that’s right pronunciation and vocabulary – grammar purists are language snobs.

  30. baduin says:

    Taxation in Poland is – flexible. If you want to get flat tax rate, you can do it – you must register a business enterprise and make a civil law contract with your employer (this must be done professionally, since the Tax Office is likely to check this).

    If you don’t want to pay ZUS, buy about a hectare of agricultural land somewhere in the east, rent it to the seller, and pay KRUS instead – it is much cheaper.

    In short, in Poland taxes are constructed in such a way that very rich and very poor pay very little.

  31. scatts says:

    I’ve been urged to go self employed a few times to take advantage of the 19% flat rate but I’ve never been tempted. It’s just cheating really, especially when 90+% of the work is more often than not done for one company.

    I thought they were supposed to be cracking down on that scam anyway?

    I didn’t know about the KRUS thing.

    Sadly, or happily, I’ve always been somewhere in the middle so I’ve never needed the benefits given to the poor nor been able to play the games of the rich.

  32. Anonymous says:

    Actually, the tax free allowance is so small that even the very poor – for example, my neighbour with her 900 zloties a month old age pension – end up paying income tax.

  33. You may be right about your UK tax burden being 35% but unfortunately, oh so unfortunately, income taxation in general has risen from 39% to 42% over the period of the current government. Big government equals big taxes – their tactic of employing the people who vote for them and putting the rest of them on long term incapacity benefit instead of employment benefit is legendary.

    Furthermore, due to the vile UK government’s unending growth the percentage of national wealth being spent by these muppets is up from 37.5% ten years ago to a whopping 45% today.

    What a price to pay for destroying standards and rising violent (so often unreported) crime.

    Please don’t call a Civil Enforcement Officer on me!!!! Oh, no. That’s right. That’s a traffic warden. Christ. When will be rid of these people.

    P.S. Flat rate taxes are a fantasic idea but most governments are unwilling to accept lower receipts in the first year of such a system. No balls.

  34. darthsida says:

    Re flexible English grammar in this post about inflexible Polish taxes

    1.

    Guys. It’s really not up to me if or how English changes. I can’t complain about the grammar-translation metod, it’s the best. I am certain OUP, CUP and other publishers who added to Britain’s GDP selling grammar books to foreign students would not be happy about the “mix with natives and imitate” approach. I’m not happy about the approach either, for my English-thirsty ears got sorely sere in London.

    2.

    Dat, I don’t think there is a notion of a “rather flexible” law. A law admits or a law prohibits. So whenever come across a legal should, I take it as equal to must, not as a recommendation or advice. Likewise, I take “thou shalt not steal” as an injunction, not a tip.

    3.

    I don’t think grammar purists need to be snobs. I’d sooner think grammar infidels are lazy don’t-carers. It’s just Scatts wrote something. I saw, I wondered, I asked. More I shan’t. Read: I won’t. [I asked about taxes, too, but the only person that reacted said the question had been useless.]

  35. scatts says:

    Darth,

    You need to do one or other of these;

    1/ Stop taking the pills

    2/ Start taking the pills

    :)

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