PIT for care in Germany: full-time job, contract or Polish JDG

The provision of care in Germany alone does not determine which PIT form is appropriate. First, you need to determine on what basis you receive remuneration.

At least three different situations are possible:

1. a Polish or foreign company employs you under an employment contract,
2. you receive remuneration from the mandate contract,
3. you run a Polish JDG and sell your own service to an agency or a client.

PIT-11 cannot be booked as JDG income just because the same person has a registered business.

When you receive PIT-11

PIT-11 is the payer's information about income, costs, contributions and advance payments collected. Most often, it concerns work, orders or other income settled by the payer.

If you only generate income processed by Polish payers and meet the other conditions, PIT-37 may be appropriate. Having a JDG does not exclude PIT-37 for private income, but income from the activity itself is settled separately on the form appropriate to its form of taxation.

Amounts from PIT-11 are not automatically transferred to the part regarding advances due from business activities. Advances collected by the payer and advances calculated independently by the entrepreneur are different items.

When you provide a service under JDG

You settle income from actual activity:

• on PIT-36 - at the scale,
• on PIT-36L - for flat tax,
• on PIT-28 - for a lump sum payment.

PIT/B is an annex to the entrepreneur's tax return containing information about the business activity. It is not the equivalent of PIT-11 and you should not assume that a foreign agency "sends PIT/B".

You do not settle tax-deductible costs on a lump sum basis. On a scale and linear basis, an expense may be considered an expense only after meeting the usual conditions of connection with income and documentation.

Poland-Germany Agreement: economic activity

For the company's profits, the starting point is Art. 7 of the Polish-German agreement on the avoidance of double taxation.

The profits of a Polish company are, in principle, subject to taxation in Poland, unless the business is conducted in Germany by a permanent plant located there. The mere fact of staying with a customer or providing a service in Germany does not automatically mean the establishment of a permanent establishment. The permanent establishment, the way the business is organized, the time and the provisions of the contract are important.

If a German permanent establishment is established, part of the profit attributable to it may be taxed in Germany. Then you need to use the appropriate method of avoiding double taxation resulting from the agreement and current regulations, and not automatically the method of proportional deduction.

Poland-Germany Agreement: hired work

For remuneration from work, Art. 15 of the contract. Wages may be taxed in the state where the work is performed, but the 183-day exception requires several conditions to be checked together - not just the number of days.

It also matters who the employer is, who economically bears the cost of remuneration and whether the employer has a plant in Germany. The 183-day rule cannot be transferred from hired work to the revenues of a Polish JDG.

PIT/ZG

PIT/ZG is used to report specific foreign income. Whether it is needed depends on:

• sources of income,
• taxation countries,
• the appropriate tax agreement,
• the method used to avoid double taxation,
• main form.

The fact that the service was physically performed abroad is not sufficient to mechanically add PIT/ZG.

When correction is needed

Correction may be needed if:

• income from PIT-11 was entered as the sale of JDG,
• JDG revenue was settled only on PIT-37,
• Art. was applied. 15 instead of art. 7 of the contract or vice versa,
• German tax was incorrectly reported,
• the payer's advances were entered as entrepreneur's advances,
• the required PIT/ZG or PIT/B was omitted.

Correction does not always mean lack of consistency. If arrears arise, interest may be payable. Depending on the circumstances, active regret may need to be considered, although it is not necessary for every successful declaration correction.

Documents to be checked

Before settling, collect:

1. contract with the agency or client,
2. PIT-11, if issued,
3. German tax documents, if the tax was collected in Germany,
4. invoices issued under JDG,
5. information about the place and time of work,
6. documents regarding a permanent establishment or establishment,
7. confirmation of tax payment.

Sources

• Poland-Germany Agreement - ELI, art. 7, 15 and 24
• PIT Act - ELI
• Podatki.gov.pl - PIT returns

Do you need to check documents from Germany?

Oxyok provides accounting for Polish JDGs cooperating with foreign countries - from PLN 49 + VAT per month. First, we determine the source of income and the content of the contract, and then the form.

Write to Paweł.