I am a board member of a company operating in Poland. I live abroad, but I have Polish citizenship. I do not have permanent residence in Poland, but I have a Polish identity card. Am I a foreigner within the meaning of Polish tax regulations? The function of a member of the board of directors requires frequent visits to Poland and coordination of all activities even from abroad (e.g. it concerns electronic banking), because only the board consisting of me and the president (my husband), is authorized to represent the company externally, mainly in offices and banks. Is the remuneration received (I serve as a member of the board of directors by appointment) taxed in Poland with a 20% flat tax? Is it subject to social security contributions? Will it be a deductible expense for the company? - asks a DF reader

The Personal Income Tax Law (hereinafter updof) does not use the term "foreigner." It uses the concepts of unlimited or limited tax liability to determine a person's tax status. Identifying a foreigner with a person subject to limited tax liability is only a certain simplification. In practice, it may happen that a foreigner (a citizen of another country) is subject to unlimited tax liability, while a person with Polish citizenship is subject to limited tax liability.
The tax status is determined primarily by where the person lives.

Intent counts

According to Article 3(2a) of the updof, individuals who are not residents of Poland are subject to tax liability only on income from work performed in Poland on the basis of a business relationship or employment relationship, regardless of where the salary is paid, and on other income earned in Poland. This is precisely the limited tax liability.
The cited provision does not mention citizenship, which means that also a person with Polish citizenship may be subject to limited tax liability. Also, possession of a Polish identity card is not a criterion on the basis of which a person's tax status is determined.
What is decisive, however, is the place of residence outside Poland. In light of Article 25 of the Civil Code, the place of residence of an individual is the place where that person resides with the intention of permanent residence. It cannot be equated with the place of permanent residence, which for the purposes of updof has no meaning. A given person may stay in Poland even for a whole year, but what is important is the intention of permanent residence in Poland (the will of that person). If he or she does not declare residence in Poland, then his or her residence should be considered to be abroad. Of course, the taxpayer will have to prove, if necessary, before the tax office, the fact that he lives abroad.

With tax but without premiums

If a member of the board of directors meets the conditions for inclusion in the limited tax obligation, then the income earned by him or her on the basis of his or her appointment will be taxed - in accordance with Article 29 of the updof - with a flat 20% tax. The amount of this tax shall be paid by the company, as the payer, to the tax office by the 20th of the month following the month of payment of remuneration. By February 20 of the following year, on the other hand, it must prepare the IFT-1R information and provide it to the taxpayer and the tax office competent for taxation of foreign persons.
The Social Security Act of October 13, 1998 (Journal of Laws No. 137, item 887, as amended) does not mention serving as a member of the board of directors by appointment as a title for a person to be subject to pension and disability insurance. This means that a board member serving on the basis of an appointment is not subject to the obligation to pay social security contributions. This applies to both persons with limited and unlimited tax liability.
Also, the provisions of the Law of January 23, 2003 on universal insurance in the National Health Fund (Journal of Laws No. 45, item 391, as amended) do not list among the titles to health insurance the performance of the function of a member of the board of directors, so he is not subject to the insurance obligation.

Cost to the company

Remuneration paid to members of the board of directors for their function - regardless of whether they are limited or unrestricted taxpayers will be a tax-deductible expense for the company. This is because it is a cost incurred for the purpose of generating revenue and has an impact on the generation of revenue in the company.
It does not constitute a unilateral benefit, as referred to in Article 16(1)(38) of the Corporate Income Tax Act - it is an equivalent for the time spent serving as a member of the board of directors, and we are dealing with a unilateral benefit when one does not receive a reciprocal benefit from the person to whom the benefit is granted.