METHODS OF PREVENTING DOUBLE TAXATION IN THE AREA OF PERSONAL INCOME TAXATION INCLUDING THE RULES OF FREE MOVEMENT OF WORKERS
METHODS OF PREVENTING DOUBLE TAXATION IN THE AREA OF PERSONAL INCOME TAXATION INCLUDING THE RULES OF FREE MOVEMENT OF WORKERS

Summary/Abstract: In European Union countries, income from hired labor is taxed in the country in which thework is done. Regardless of this, taxpayers who are subject to unlimited tax liability in Polandare obliged to settle this income also in Poland. To avoid double taxation of the same income,double taxation conventions are concluded between countries. They provide for two methodsof avoiding double taxation: the exclusion method with progression and the method of proportionaldeduction (credit, tax credit). Certain double taxation conventions concluded by Poland,exempt from taxation in Poland the income from hired work performed in another country(taxed in the country in which the work was performed). These incomes are taken into accountin the annual settlement submitted in Poland only when the taxpayer also achieved incomesubject to taxation in Poland on general principles. Income from work abroad, exempted fromtaxation under a bilateral agreement, is then used to determine the interest rate, which will thenbe applied to the taxation of income in Poland.

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