Where Home Is: The Puzzle of Tax Residency
Consider Mr. Kowalski. He has been working in Italy for three years now. His wife came with him; so did the children. They rent an apartment in a town whose name he has learned to pronounce properly, and the kids attend the local school, where they’ve picked up Italian with the enviable speed of the young. Back in Poland, Mr. Kowalski still owns a house. He maintains a bank account there. His employment contract with his Polish employer remains technically in force—suspended, but not severed. So where, exactly, should Mr. Kowalski pay his taxes?
The question sounds simple. It is not. Cases like his have a way of metastasizing into years-long disputes with tax authorities, the kind that ultimately land before Poland’s Supreme Administrative Court. (Mr. Kowalski is a composite, but his circumstances mirror a real case that reached that court in September 2018.) The problem he embodies sits at the foundation of how Poland—and, indeed, most countries—thinks about income tax. Get the residency question wrong, and a taxpayer may find himself liable for taxes on his entire worldwide income in a country where he no longer lives, or liable nowhere at all, or, in the most Kafkaesque scenarios, liable in two places at once.
In an age of unprecedented mobility—Polish citizens scattering across Europe for work, foreigners arriving in Warsaw and Kraków, digital nomads conducting business from laptop screens in Lisbon or Bali—the question of where one “really” lives has become both more urgent and more elusive. Tax offices, unsurprisingly, tend to resolve ambiguity in favor of the treasury.
Three Roads to Polish Residency
Polish tax law, like a children’s fable, offers three paths through the forest. Under Article 3(1a) of the Personal Income Tax Act, a person is deemed to reside in Poland if he possesses, on Polish territory, either a “center of personal interests” or a “center of economic interests”—the statute groups these under the evocative phrase “center of vital interests“—or if he spends more than a hundred and eighty-three days per tax year in the country.
Note the repeated use of “or.” The legislature has constructed not a single test but three independent criteria, any one of which, if satisfied, transforms a person into a Polish tax resident, subject to unlimited tax liability on income earned anywhere in the world. You needn’t meet all three conditions, or even two. One will do.
The Hundred-and-Eighty-Three-Day Trap
The day-count rule has an appealing clarity. Spend more than half the year in Poland, pay Polish taxes—what could be simpler? Yet this apparent simplicity conceals interpretive snares.
The Supreme Administrative Court, in a 2015 decision, cautioned against mechanical reasoning. Just because a taxpayer can prove he worked in Britain on a hundred specific days does not mean the tax authorities may blithely assume he spent the remaining two hundred and sixty-five days in Poland. The burden of proof, the court suggested, cannot be satisfied by subtraction.
A regional court in Olsztyn pushed the logic further in 2016. Even if a taxpayer’s wife lives in Poland, and even if he exceeds the hundred-and-eighty-three-day threshold, these facts alone do not establish residency—not when the case might trigger the tie-breaker provisions of a double-taxation treaty. Context, the court insisted, is everything.
The Center of Personal Interests: Where Is Your Hearth?
“Personal ties” encompass family relationships, friendships, and participation in social, cultural, athletic, or political life. In practice, the presence of a spouse and minor children in a particular country tends to weigh heavily.
A 2016 decision from the Białystok administrative court offered an expansive definition: the center of personal interests lies in the country to which a person is bound by family connections, social activity, cultural engagement, business operations, income sources, and assets—both immovable and movable. One must consider employment, friendships, political involvement, and the place from which a person manages his property. “All these circumstances,” the court wrote, “should be weighed as a whole, taking into account the individual’s particular conduct.”
The Supreme Administrative Court, in a 2018 ruling, introduced the suggestive concept of the “family hearth.” What matters is not merely that a person owns or rents a dwelling but that he tends to it—that he does “everything necessary to have this residence at his disposal at all times, continuously, not just occasionally.” The inquiry, in other words, is about intention. Has the taxpayer arranged his life in a way that signals he means to stay?
A family that relocates abroad together—renting an apartment on a long-term lease, enrolling the children in local schools, registering with local health services—has likely established a new hearth. For single individuals, the analysis shifts: courts look at where they maintain a household, where their friends are, where they attend concerts or football matches, where they practice their hobbies.
The Center of Economic Interests: Follow the Money
Polish law does not define “center of economic interests,” but the concept is intuitive enough. Where does a person earn most of his income? Where does he work, practice his profession, or run his business?
Courts have also considered investment portfolios, real-estate holdings, bank deposits, outstanding loans, and insurance policies. Yet a 2008 decision from Bydgoszcz warned against reducing the inquiry to business considerations alone. Economic ties must be assessed alongside personal ones; neither category trumps the other.
The Turning Point: Property Left Behind Does Not Decide
Here is where recent jurisprudence has proved most favorable to taxpayers. A 2016 Warsaw administrative court decision articulated a principle of considerable practical importance: while property left behind in Poland is a factor in determining one’s center of vital interests, it is not decisive.
The court reasoned that working abroad, earning a salary there, living with one’s family there, and sending one’s children to school there “outweigh”—that was the court’s verb—ownership of a Polish apartment or the maintenance of a Polish bank account.
The Supreme Administrative Court reached the same conclusion in a 2015 case. Circumstances related to property left behind and an eventual return to Poland after the end of a foreign work assignment carry weight, but they are not determinative.
Mr. Kowalski’s Vindication
In the 2018 case that inspired our Mr. Kowalski, the taxpayer had been posted to Italy. He retained two Polish bank accounts and owned real estate in Poland, which he rented out during his absence. He remained enrolled in Polish social insurance, and his Polish employment contract was merely suspended, not terminated.
The tax authorities, surveying these ties, concluded that Poland retained its grip on his worldwide income. The Supreme Administrative Court disagreed—emphatically.
The court acknowledged that property left in Poland could influence the residency analysis but found that, in this case, the taxpayer’s Polish ties were “marginal.” One cannot speak of a Polish economic center when the taxpayer earns most of his income abroad—indeed, when the Italian job was the very reason he moved. He worked in Italy. He lived in Italy with his family. His children attended Italian schools. Italy, not Poland, was home.
The court added a technical but important observation: the tie-breaker rules in double-taxation treaties applied only when a taxpayer genuinely qualified as a resident of two countries. Here, no such conflict existed. The taxpayer was, unambiguously, an Italian resident.
The Residency Certificate: Necessary but Not Sufficient
A taxpayer who has relocated abroad will typically obtain a residency certificate from his new country’s tax authorities—a document confirming, at the moment of issuance, that he is a tax resident there. Polish courts have clarified that such certificates are useful, even essential, for invoking treaty protections, but they do not automatically settle disputes with Polish authorities. A certificate is evidence, not a verdict. If the Polish tax office challenges the underlying facts, the taxpayer must still demonstrate where his vital interests actually lie.
Practical Lessons
The courts’ reasoning yields several principles worth remembering.
Holistic assessment prevails over single facts. No one element—not real estate, not a bank account, not even a spouse’s continued presence in Poland—automatically determines residency. The inquiry is cumulative.
Reality outweighs formality. If a taxpayer lives abroad with his family, if his children attend foreign schools, if he earns his income there, these facts carry more weight than property or accounts maintained in Poland. Authorities cannot ignore a taxpayer’s actual life and substitute a fiction built from selected data points.
Property left behind is secondary. Owning a Polish apartment or keeping a Polish bank account does not anchor a person to Poland when his genuine personal and economic ties are elsewhere.
Intention matters. Courts want to know whether a taxpayer has established a “hearth”—whether he has arranged his living situation to be available continuously, not just episodically.
The primary income source signals economic center. A taxpayer cannot be said to have his economic center in Poland if he earns the bulk of his income abroad, especially when that foreign job was the reason for his move.
The day-count rule requires careful application. Merely establishing that a taxpayer worked abroad on certain dates does not prove where he spent his remaining days. And meeting the hundred-and-eighty-three-day threshold, even combined with a spouse’s Polish residence, may not suffice if treaty rules apply.
Certificates help but do not conclude. A foreign residency certificate is indispensable for treaty purposes but does not foreclose the Polish tax office’s right to examine the facts.
Documentation is insurance. Anyone planning to change tax residency should collect evidence: lease agreements, utility bills, school enrollment confirmations, medical records, proof of participation in local organizations. In a dispute, these documents become invaluable.
For Those Contemplating a Move
Taxpayers planning to relocate abroad would do well to make their departure unambiguous.
Transfer your center of life. Both personal and economic ties should clearly shift to the new country. Move with your family. Enroll your children in local schools. Sign a long-term lease or purchase property. Register for local health insurance. Participate in community life.
Shift your income source. Your principal employment should be in the new country; your main earnings should flow from there. If you run a business, consider relocating its seat or establishing a foreign branch.
Minimize Polish ties. Where feasible, sell Polish real estate or transfer it by gift. Close redundant bank accounts. Terminate suspended employment contracts. Cancel insurance policies you no longer need.
Collect evidence. Preserve every document that confirms your life abroad: leases, utility bills, school records, medical appointments, local tax filings, club memberships, foreign bank statements.
Obtain a residency certificate. After settling abroad, request a certificate from the local tax authorities as soon as possible. It will prove essential in dealings with Polish institutions.
Consult a specialist. Given the complexity of the rules and the rigor of Polish enforcement, professional advice—from a tax adviser experienced in international matters—is well worth the cost, both before departure and during the initial years abroad.
Mr. Kowalski, in the end, won his case. The courts looked at where he actually lived, where he worked, where his children went to school, and concluded that Italy—not Poland—was his home. The formalities he left behind, the suspended contract and the rented-out house, mattered less than the life he had built elsewhere. It is a reassuring outcome, though one that arrived only after a journey through the courts. For those who would rather avoid such journeys, the lesson is clear: when you move, move completely—and keep the receipts.
Founder and Managing Partner of Skarbiec Law Firm, recognized by Dziennik Gazeta Prawna as one of the best tax advisory firms in Poland (2023, 2024). Legal advisor with 19 years of experience, serving Forbes-listed entrepreneurs and innovative start-ups. One of the most frequently quoted experts on commercial and tax law in the Polish media, regularly publishing in Rzeczpospolita, Gazeta Wyborcza, and Dziennik Gazeta Prawna. Author of the publication “AI Decoding Satoshi Nakamoto. Artificial Intelligence on the Trail of Bitcoin’s Creator” and co-author of the award-winning book “Bezpieczeństwo współczesnej firmy” (Security of a Modern Company). LinkedIn profile: 18 500 followers, 4 million views per year. Awards: 4-time winner of the European Medal, Golden Statuette of the Polish Business Leader, title of “International Tax Planning Law Firm of the Year in Poland.” He specializes in strategic legal consulting, tax planning, and crisis management for business.
