Annual Norway-Poland tax return 2022 – how to file without losing out?
Norway-Poland tax return 2022 – how to file without losing out?
As a rule, we assume that if we work in Norway and spend most of the year here, we also have tax residence here. This is often a mistaken assumption that can cost us a lot in the event of an audit by the Polish tax office. Often, by claiming deductions in Norway, we may… actually gain nothing. What exactly does this mean? Where do I need to file? How do I check where and how much tax I have to pay?
Please read on.
Tax residence
How do I check it? A simple tool
Let’s start with the issue of tax residence. It determines which country we should file in and has the greatest impact on whether Norwegian deductions will be beneficial for us or not. There are also other factors involved, but the basis for determining tax returns is our tax residence.
- To check your residence click here.
- You will be redirected to our tool, which carries out a preliminary check of your tax residence. All you need to do is answer a few questions.
- The result from our tool is not binding. It is only meant to point you towards where you have tax residence.
- If you want 100% confirmation of your tax residence, order an individual interpretation from KIS.
- If you want to discuss the result from the tool, order a tax consultation.
If we have already checked our tax residence, we can move on to the next step.
Poland-Norway taxes
Do I need to file in Poland?
Once you know your tax residence, you can finally determine where you need to file and pay taxes. In short, it looks like this:
- if you are a tax resident in Norway, you only file here if: you are entitled to any deductions, you need to add cryptocurrency gains, you need to add income from Poland, you need to add rental income, Skatteetaten asks you to add a bank account, etc. If none of these apply to you, you do not need to file! The office will do it for you automatically 🙂
If you have no income in Poland, you do not need to file a return there! - if you are a tax resident in Poland, the matter becomes more complicated. In general, you are then obliged to submit a PIT together with the PIT-ZG appendix, in which you will also declare your Norwegian income. Unfortunately, in Poland the office will not settle this automatically, so each time we must submit such a return ourselves.
And do you need to file in Norway? Will it be worthwhile for you? More on that below.
Where and how much tax will I pay?
If you want to check where and how much tax you will pay, and whether it is worth using deductions in Norway, go to our next tool – Poland-Norway tax calculator 2022.
This is where we can see whether we will have to pay additional tax in Poland or not. Of course, this only applies if we have Polish tax residence.
After filling in all the fields, we will receive two amounts:
- the first is “Total tax in Norway” – that is the total amount of tax we will pay in Norway. This is not an amount due to the office, but the calculated tax for the whole year, against which we have been paying advance payments throughout the year. We can subtract it from the advance payments made during the year and then, if the amount is positive, that is probably our refund, and if it is negative, that is probably the amount due.
- the second is “Estimated additional tax in Poland” – that is how much we will have to pay in Poland on our Norwegian income, based on the double taxation treaty between the two countries.
Let’s focus now on the second amount. If it is 0 PLN – congratulations, you do not have any additional tax to pay in Poland! This means that the tax costs entered above in the “Tax data – Norway” section are beneficial for you. If you have not entered them – do so now and see whether the estimated additional tax in PL has changed. As long as it does not change, Norwegian deductions are beneficial for you.
The situation is different if we end up with additional tax in Poland. In that case, Norwegian deductions are not worthwhile for us. Why? Try entering any tax costs in NO. You will notice that the estimated additional tax in Poland increases – and by exactly the amount by which you reduced your taxes in NO. So it will not be worthwhile to file in NO, because what you deduct here you will still have to pay back in Poland, in the exact equivalent amount.
What determines additional tax and refunds in Poland?
As mentioned earlier, there is a double taxation treaty between Norway and Poland. As the name suggests, its purpose is to divide taxes and calculate them in both countries in such a way that you simply do not pay tax twice.
Because taxes in Norway are often higher than Polish taxes for a given income, after deducting them from the tax calculated in Poland we end up with a negative amount – so the tax is reduced to zero and we do not have to pay anything extra in Poland. This is the most favourable situation for us, because it means that deductions in NO are beneficial and allow us to reduce tax.
However, if taxes in Poland turn out to be higher than taxes in Norway, we have additional tax to pay. In that case, we will also pay in Poland the equivalent of what we deduct in NO. This is because when we claim deductions, our Norwegian tax decreases, while the Polish tax remains the same.