Changing Tax Residence
Changing Tax Residence
PRIVATE RELOCATION OF A HNWI AND BUSINESS

Wherever you wish to live, invest, develop your business, or work around the world, I will help you plan your and/or your business relocation with a clever touch.
For over 20 years, I have handled hundreds of tax residence change projects in numerous destinations around the world, in addition to bringing customers back to Poland.

Moving house is inextricably linked to diverse tax systems and the risk of incurring unforeseen costs.

Find more below
WE LIVE IN A TIME OF DYNAMIC CHANGES AND IT IS QUITE DIFFICULT TO KEEP UP WITH THE CHANGE IN TAX REGULATIONS, AND YET THEY AFFECT ALL OF US.

In addition, constant geopolitical turmoil raises the temperature a great deal and, in this context, the following question is of ever-growing importance – which country is the best to live, invest or run a business in? Indeed, there are limitations to such a manoeuvre and advantages resulting from the actual physical presence in a given place. The potential for development, peace of life, a better climate, and, finally, taxes could be an important reason encouraging you to opt for international relocation. Then you need to know how to effectively transfer your tax residence to another country.

You need to be well prepared to change your tax residence. Even if you have already moved out, it is worth checking what your situation looks like and whether you have actually taken care of everything by moving your centre of vital interests. The main mistakes during relocation include:

1. LACK OF UNDERSTANDING OF THE PRINCIPLES OF THE SO-CALLED CENTER OF LIFE'S INTERESTS

It is important to check where the centre of vital interests is located and what kind of conditions need to be met if you want to be considered a tax resident of a given country.

2. OBTAINING TAX RESIDENCE OF ONE COUNTRY WITHOUT RELINQUISHING THE PREVIOUS RESIDENCE

Obtaining a residence in one country does not automatically result in the loss of the previous one. It is sometimes much easier to acquire tax residence than lose the previous one

3. FOCUSING ONLY ON THE BENEFITS OF A NEW TAX DESTINATION

Taking into account only the tax conditions and potential benefits of the target destination rather than the global level of taxation, exit tax and terms of the double taxation treaty.

4. FAILURE TO OBTAIN THE CERTIFICATE OF TAX RESIDENCE IN THE NEW DESTINATION

This means that Poland can continue to charge taxes and the preferences of the double taxation agreement are not applied.

5. CRYPTOCURRENCIES

Big, fast profits and the desire to cash in on them? You read that in Portugal you will do it tax-free by obtaining the NHR status. You cash in on them and invest your income, for example, in apartments in Poland. All is well, but the Polish tax administration may ask the question of where the money comes from and collect the tax.

6. FAILURE TO UPDATE THE DATA IN THE BANK

Failure to notify banks and other financial institutions of changing tax residence. It ought to be remembered that there exists a system for the exchange of information between banks. As a result, banking data is continuously reported to Poland and the Polish tax office will have information about you.

It is worth remembering that each case may be different, and my team will discuss every detail with you. You will receive a service adjusted to your needs. And if your case requires working with lawyers from the target destination, I will manage the whole process together with the team in Poland, and you will be provided with one point of contact.

10 MLN
PLN
OF SAVINGS ON
EXIT TAX PER MONTH
200
QUERIES
ABOUT THE CHANGE OF RESIDENCE, WITHIN 2 MONTHS OF 2022
45 families
RELOCATED
ABROAD IN A MONTH
PORTUGAL IS NO 1
AMONG CUSTOMER INQUIRIES
CHANGING YOUR PLACE OF RESIDENCE IS QUITE A CHALLENGE!

So how should we prepare for this? First, you have to answer the question of whether the move will involve a change of tax residence…

Watch an episode of my Wealth Advisory show. Anna Maria Panasiuk on the “Change of Tax Residency”

TRUSTED US
  • BETWEEN POLAND, UK, SINGAPORE, AUSTRALIA AND PORTUGAL… SO HOW TO MANAGE THE RESIDENCE OF AN INVESTOR AND AN ENTREPRENEUR OPERATING GLOBALLY?!

    An investor, who lived in Australia and the UK for many years, returned to Poland to be able to repair their business during the pandemic. Then, in 2022, he decided to leave again to support his international holding. As the structure of its revenues is very extensive, and its companies are scattered in many countries, i.e., in Poland, Dubai, Singapore and Great Britain, it was necessary to analyse in detail the target place of residence taking into account the client’s preferences. The client was adamant about living in a dream place, which, for the time being, turned out to be a tax and legal quagmire. For the next two years, it was necessary to build the best possible destination and a way to reach the goal – i.e., to live safely in the target destination. Together with my team, I devised a plan, thanks to which the client would live in Dubai in an international environment, which he would use to build a business, and after two years he would move to the UK, where he would combine the residence with his beloved Portugal. We make dreams come true while making it happen in a safe way and considering all aspects of our customers’ lives.

  • FAILURE TO OBSERVE TAX OBLIGATIONS, WHICH COULD HAVE COST (HORROR OF HORRORS) PLN 10 MILLION

    A well-developing company in the field of IT services on the international market decided to establish several satellites in Dubai, Singapore and Switzerland. The owners of the project made several investments, which enjoyed nearly explosive success in new markets, winning more and more new customers. In order to support the business, the gentlemen decided to move to Dubai and Switzerland. At this point, they contacted us for support and verification that their structure was going in the right direction. It turned out that in all that haste caused by the rapid development of the organization, they forgot about their foreign exchange obligations and about the horror of the exit tax, the burden of which could sink the developing business. We successfully managed to tackle the situation in time so that the gentlemen would not lose their Polish tax residence. At the same time, it was possible to arrange the structure internationally so that its further expansion is devoid of such legal and tax risks, and above all unnecessary emotions of its shareholders.

  • NOTE! CRYPTOCURRENCIES AND DOUBLE RESIDENCE!

    A young man who has accumulated some cryptocurrencies decided to relocate to Portugal. He contacted us when he was already living there. It turned out that the situation in which he found himself secured him double tax residence. It happened so because it turned out that our entrepreneur not only invested in cryptocurrencies, but above all earned money in cryptocurrencies. It was necessary to immediately find a solution to the problem of how to tax income from the services for which he obtained stablecoins, and which Polish accounting could not properly qualify. Very quickly, it turned out that we had not only one area, i.e., the sale of cryptocurrencies, but also trading (investments on the cryptocurrency market) and the provision of services in exchange for cryptocurrencies, and these are revenues which qualify as taxable income in Portugal. In order to rearrange the client’s situation in a safe way, it was first necessary for his entire family to move house, sever ties with Poland and properly arrange his assets to exclude the risks that he had unknowingly generated.

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HOW CAN I HELP YOU?
  • acquiring the resident status
  • completion of all necessary formalities
  • representation before the required authorities
  • tax and accounting services in the new location
  • discussions with financial institutions, along with the optimization of the costs of handling relocation
  • inheritance issues, which are also very important when changing the place of residence
  • tax analysis for people who do not live in Poland along with verifying whether they have actually lost their tax residence — in this case, I help in completing overdue formalities
ARE YOU CONSIDERING THE CHANGE OF YOUR RESIDENCE TO ONE OF THE FOLLOWING LOCATIONS? WATCH THE EPISODE DEDICATED TO IT

ARE YOU INTERESTED IN THESE DESTINATIONS? OR ANY OTHER?

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FAQ
WHAT IS TAX RESIDENCE?+

Tax residence determines the place where the taxpayer is obliged to pay taxes on the income obtained. In order to establish tax residence in Poland, it is enough to meet one of the conditions, i.e., the people who stay here for more than 183 days in a calendar year or have a centre of personal or economic interests in the Republic of Poland may settle their tax in our country. If, on the other hand, there are strong reasons to have a centre of interests in a country other than Poland, such a person will be a tax resident of another country – even if he/she owns several real properties in Poland.

HOW DO I CHANGE MY TAX RESIDENCE?+

A change of tax residence is possible after demonstrating that the centre of personal and economic interests has been lost. The change of tax residence is also determined, above all, by the change of permanent residence with the family, i.e., the change of the place of where the “household” is.

WHO CAN THINK OF CHANGING THEIR TAX RESIDENCE?+

Everyone It should only be remembered that it is not enough to stay only a certain number of days in the target country of tax residence, but, quite importantly, your centre of vital and economic interests should be installed there. Changing the tax residence is a good solution for those who do not have to live in Poland for family or professional reasons, but, for various reasons, perceive some potential in another destination.

WHAT IS EXIT TAX?+

In other words, the relocation tax, also called the tax on unrealised gains, because hypothetical gains are subject to taxation. It may occur as a result of changing tax residence or transferring the assets related to business activity abroad. In the case of natural persons changing their tax residence, it applies only to the assets for which Poland loses the right to impose tax after the change of tax residence (e.g., shares in companies) and only if the market value of such assets exceeds a total of PLN 4 million.

HOW DO I LOSE MY TAX RESIDENCE?+

The loss of tax residence consists in the fact that one loses the relationship with Poland in such a way that we no longer have a place of residence in Poland, i.e., we do not have our household  (our immediate family does not live in Poland). We do not run business here. And our stay on the territory of Poland is short enough to prevent us from being considered a tax resident in the Republic of Poland.

WHAT IS A TAX RESIDENCE CERTIFICATE? HOW DO WE OBTAIN IT?+

The tax residence certificate is intended to prevent evasion of obligations in the tax office and incorrect application of the provisions of international agreements on the avoidance of double taxation. This is a certificate issued by competent tax administration of the country specifying the place of residence or stay of a natural person for tax purposes. It defines the country in which the taxpayer is obliged to pay taxes to the country in which they earn income. It allows for avoiding double taxation if the source of the income originates in a country other than the country of residence.In order to obtain a tax residence certificate in Poland , it is necessary to complete the CFR-1application. The taxpayer must provide their identification details, the reason for requesting the document, the number of copies and the method of receipt. Subsequently, an application should be submitted to the tax office assigned by virtue of the address of the company’s registered office or residence.

WHAT INFORMATION SHOULD A TAX RESIDENCE CERTIFICATE CONTAIN?  DOCUMENT SAMPLE

Unfortunately, there is no unified international form on which a certificate of tax residence would be issued. Therefore, state tax administrations issue certificates of fiscal residence according to their own adopted form and at their discretion. Polish regulations indicate that such a certificate should contain at least:

  • Data of the issuing authority
  • Date of issue
  • Identification data of the entity to which the certificate pertains
  • Certification of the place of residence/registered seat

Optionally, expiration date information.

WHAT SHOULD I PAY ATTENTION TO WHEN APPLYING FOR A TAX RESIDENCE CERTIFICATE?

It is necessary to clearly distinguish the certificate of tax residence from any other documents issued by administrative authorities. Specifically, certificates issued by, e.g., municipal authorities confirming the place of residence within the territory of a given country, are not certificates of tax residence. 

Many countries require a notification when moving to settle in their territory, at a municipal office or a police station. A document issued on this occasion may be helpful, e.g., in the process of applying for the status of tax resident in a given country.

Therefore, a certificate of issuing a tax identification number, a certificate of registration as a VAT payer or a certificate of no tax arrears are not certificates of tax residence. In the case of entities conducting business activity, an extract from the National Court Register of entrepreneurs cannot be used as a certificate of tax residence either.

RISK OF DOUBLE TAX RESIDENCE+

Please note that it is possible to have a double tax residence. This is particularly important in the case of natural persons, where individual states may have different internal regulations determining residence. For example, in the United States, a tax resident is considered to be a person who has the so-called “green card”, regardless of whether that person resides and lives in the United States or not. If, in addition, such a person resides in Poland for more than 183 years, they hold a double tax residence, i.e., they would potentially be subject to taxation on all their income both in Poland and in the USA. A similar situation may also occur in the case of companies. Some countries accept the place of effective management (such as Poland) as the criterion of residence, while others may accept the criterion of formal registration (i.e., where the company was registered).

Double residence issues are settled by agreements on the avoidance of double taxation. In the case of natural persons, the criterion which most often prevails is the so-called centre of vital and economic interests, while in the case of companies, the place of actual management.

WHAT IS the CENTRE OF VITAL INTERESTS?+

We have a centre of vital interests in the country where we live together with our immediate family (husband, wife, minor children…). When you are single, you take into account social relationships, family, place of employment, political or cultural activities and any other activity (owned real properties where we spend our free time, e.g., if we have a dog or cat in a given country).

LIVING IN POLAND AND TAX RESIDENCE ABROAD – IS IT POSSIBLE?+

A highly important premise determining the establishment of tax residence in Poland may be the fulfilment of one of the criteria (they are separable). This means that if you stay in the territory of the Republic of Poland for more than 183 days in a given year or have a centre of personal or economic interests in Poland, you may be considered a Polish tax resident. These premises must be observed, because the regulations clearly state that all natural persons who reside in the territory of the Republic of Poland are subject to unlimited tax liability.

MOVING ABROAD AND TAX RESIDENCE+

The persons who work abroad and stay in Poland for less than 183 days may also be considered Polish tax residents. On the other hand, they have their immediate family and personal property here – in such a situation, their centre of vital interests is located in Poland. However, it is worth noting the agreements on the avoidance of double taxation concluded between Poland and the second destination – then, when determining the residence, the so-called conflict rules apply, and they are resolved in a specific order:

  1. has a permanent residence (household). If it exists in two countries, it should be determined in which country there is a stronger personal and economic link;
  2. if the first one does not ensure clarity. It will be checked in which country the person resides habitually. If the same applies to both destinations, the next criterion is taken into consideration.
  3. that is, in which country the taxpayer holds citizenship. 

In the absence of a definitive answer, the tax authorities of both countries shall conclude a mutual agreement.

WHAT IS THE COMMON REPORTING STANDARD (CRS)?+

The Common Reporting Standard (CRS) is the requirement of reporting and gathering information, being obligatory for financial institutions worldwide.

Acting in the light of the CRS regulations, a Bank is obliged to determine where its customers should pay taxes (which is often associated with determining the tax residence). The bank collects the data which it already has about its customers, and it can also request missing data to be delivered.

If it turns out that the customer is a tax resident of a country other than that in which the bank accounts are held, the Bank will forward such information to the local tax authorities. The tax authorities may then exchange this information with the tax authorities of the country of residence.

CAN I BE THE OWNER OF A REAL PROPERTY IN POLAND AFTER CHANGING THE TAX RESIDENCE?+

If the real property performs investment functions and is not our place of residence, then yes, such properties can be owned. Property income tax is payable in the country where the property is located – that is, you will pay taxes for this property in Poland. However, care should be taken to ensure that the mere fact of owning real estate is not a prerequisite for establishing a centre of vital interests in a given country and official determination of a double tax residence.

CAN I RUN A BUSINESS IN POLAND AFTER CHANGING TAX RESIDENCE?+

The fact that you do business in Poland means that you have a centre of economic interest in Poland. Therefore, when changing the tax residence, one should be careful about this fact. It may be likely that the form of the business will need to be changed.

WHICH TAX DESTINATIONS DO POLISH CITIZENS MOST OFTEN SELECT?+

Recently, my customers have chosen Portugal and Spain most frequently (a favourable climate is of importance for them, but not only). Other destinations also include countries like:

CONTACT ME

I will be happy to introduce to you the possibilities of good organisation and protection of your assets. I operate locally and internationally, adapting the best solutions: legal, tax, business and financial to the individual needs of clients.

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