“ZG” is an attachment that is attached to the PIT-36, PIT-36L, PIT-38 and PIT-39 returns. The document is submitted separately for each country where contractual gainful employment was performed. The purpose of the PIT36 ZG is to settle foreign income with the Polish tax office.
PIT-36 ZG – who files it?
The obligation to file the PIT-36 ZG is incumbent on all persons who carry out non-agricultural economic activity outside Poland or have obtained income from foreign sources. In particular, this applies to persons with unlimited tax liability in Poland (Polish tax residence). However, if any of your income was subject to tax in a given tax year, you absolutely must settle with the PIT-36 ZG return.
PIT/ZG – what is it?
Individuals with Polish tax residence are subject to an absolute tax obligation on all income earned, regardless of its place of origin. This means that all money earned in the country and abroad must be settled with the Polish tax authorities. The source of this income is also irrelevant – it can be remuneration from an employment contract, own business or various types of benefits. In law, this is referred to as unlimited tax liability. The PIT/ZG attachment is designed for this type of settlement.
Annex PIT/ZG is attached to the return:
- PIT-36 – in the case of income taxed in accordance with the general tax scale,
- PIT-36L – in the case of income taxed on a flat rate basis,
- PIT-38 for capital gains,
- PIT-39 – in the case of income from the sale of real estate
PIT-36 and ZG – who is considered a Polish tax resident?
In order to establish unlimited tax liability, it is necessary to know the definition of a Polish tax resident. Pursuant to Article 3(1a) of the PIT Act, a person with a place of residence in the territory of the Republic of Poland:
- stays in the territory of the Republic of Poland for more than 183 days in a tax year,
- has a centre of personal or economic interest in the territory of the Republic of Poland.
The first point seems obvious, but the term ‘centre of vital interests’ may already raise some ambiguity. It is worth taking a closer look at the definition of this term, as it is not specifically defined. The centre of vital interests consists of personal interests and economic interests.
The centre of personal interests concerns all family and social ties and relates to various social activities. It therefore refers to children and spouse remaining in our country, as well as to memberships in political, cultural and civic organisations and clubs and groups related to our interests. Thus, it refers to all the premises showing attachment to Poland and emotional connection with the motherland.
The centre of economic interests is already more concrete, official matters that link us to Poland. These include, above all, the place where one conducts one’s economic activity and has sources of income, as well as various types of investments, property owned, real estate or loans taken out. Another indicator of one’s ties to the Republic of Poland will be the possession of a Polish bank account and insurance and life insurance policies.
PIT/ZG – how to fill in?
In the case of accounting for income from abroad, Annex ZG must be attached to each return, completing only the part relating to the specific income. Depending on the type of income, it is necessary to complete one of the parts – C.2, C.3 or C.4 and part C.1 – depending on the source of income: work, own business, rent, copyright or other sources.
If, in a given year, we have worked in several countries abroad, a separate attachment must be completed for each country from which income was received. This means that we submit only one PIT return to the tax office with the number of forms attached corresponding to the number of countries from which we received income.
How to fill in PIT-36 ZG – double taxation avoidance method
Most countries to which Poles travel for work purposes have a double taxation treaty with Poland. This is a legal act regulating taxation, which means that we do not have to pay tax in both countries.
Each such agreement sets out the rules for filing a tax return with income earned abroad. When filing the PIT-36 with annex ZG, the following two tax avoidance methods may apply to income earned outside Poland – the exemption with progression method and the proportional deduction method.
Schedule ZG to PIT-36 – progressive exemption method
When accounting for income using the exemption with progression, taxation according to the tax scale is used. Foreign income is used to calculate the tax rate (18% tax may change to 32%) – for this purpose, foreign and Polish income is added together. The resulting rate will then apply only to income earned in Poland.
Those to whom the progressive exemption method applies will have to file a tax return showing income earned for work abroad, only if the income is also earned in Poland.
How to account for PIT-36 ZG – proportional deduction method
The situation is different in the case of a settlement using the proportional deduction method. Then we are obliged to file a return even if we have not earned any income in Poland.
The method of proportional deduction consists in deducting from the total income, the amount of income tax paid in the foreign country. It may not, however, exceed that part of the tax calculated before the deduction is made which proportionally falls on the income earned in the foreign country.
The method of proportional deduction on the basis of international agreements will apply to income from the Netherlands, Austria, Belgium or Denmark.
PIT-36 foreign income – changes to the 2023 return
The year 2023 has brought major changes to the regulations on accounting for foreign income in Poland. All due to the increase of the free amount to PLN 30000. The limited tax abolition and the high free amount in most cases make it possible to avoid paying tax on income in our country if we have also settled abroad.
Currently, there is a limit of PLN 1360 for the abatement allowance and all persons for whom the benefit caused by its application exceeds this amount will, unfortunately, be forced to pay higher tax. This applies to countries with which Poland has an agreement on proportional deduction, i.e. the Netherlands, the United Kingdom, Austria, Belgium, Norway, the USA, Ireland, Denmark, Finland or Japan, among others.
PIT/ZG – specimen printout
Below is a sample of the attachment to be submitted with the annual PIT-36 return to the tax office.
When do you have to file PIT-36 ZG?
Settlement of income tax is an obligation incumbent on all persons who earn income. Pursuant to Polish law, PIT-28, PIT-37 and PIT-36 declarations, together with the PIT/ZG attachment, must be filed by 30 April of the calendar year following the year in which the documents are settled. Note, however, that the last day for filing the declaration is movable if 30 April is a bank holiday. In such a situation, the next working day counts.
PIT-36 with annex ZG online
PIT/36 ZG online is submitted as a separate attachment to PIT-36, PIT-36L, PIT-38 and PIT-39 returns. The form is attached separately with each return using a special option on the electronic platform used. In the attachment, you should fill in only the part related to your tax return, i.e. the one described above – in part C.2, C.3 or C.
PIT/ZG Netherlands – how to account for income from the country of the Netherlands?
The Netherlands is one of the most popular countries chosen by Poles for employment. Attractive salaries and the beauty of the country encourage people to leave, but in the end there is always the need to deal with formalities with the tax office. How do settle tax from the Netherlands? You will need the Dutch tax card Jaaropgaaf, from which you will obtain the necessary data on income received in this country, needed to complete the annex ZG. According to the international double taxation treaty, the method of proportional deduction is applied when settling income from the Netherlands.
PIT-36 Annex ZG – do you need help?
If you do not know how to fill in the PIT/ZG and you want to settle your income earned outside Poland, use the help of our tax office. We will be happy to take care of all the formalities and answer your questions. Contact us, provide us with the necessary documents certifying your income earned outside Poland and rest assured that you will be able to settle your accounts. Everything will be handled quickly and efficiently and you will not even have to leave your home. We will handle the entire process electronically, contacting the tax office on your behalf. We offer efficient, secure and transparent services at affordable prices.
Settling PIT-36 ZG with our tax office is all about convenience and a guarantee of a favourable refund. Our knowledge of the regulations means that we are able to recover a high amount of income tax for you, taking advantage of all the possibilities and available allowances. Entrust us with your tax return and don’t worry about a thing. Welcome – Borsuk Podatki.
