The combination of Polish business activity with work in Germany requires an arrangement of taxes and ZUS to avoid overpayments. Thanks to the double taxation avoidance agreement, you can use the exemption method with progression — income from work in Germany is not taxed in Poland, but affects the tax rate on your company’s income. It is also crucial to obtain the A1 certificate, which confirms subordination to the Polish ZUS and protects you from paying contributions in two countries. In Germany, your employer deducts the income tax, which you cannot avoid, but you can reduce its amount by monitoring the tax class and available deductions. Through conscious planning of these steps, business activity in Poland and work in Germany allow you to increase your income without fears of chaos in the settlements.
Polish business activity and work in Germany — how not to pay the same taxes twice?
Many people choose to combine Polish business activity with work in Germany because that is a real chance for better earnings and professional development. The problem arises when taxes have to be settled and the fear of double taxation emerges. Don’t worry, there are clear rules that protect you from double taxation for the same income if you approach the topic correctly. Poland and Germany have signed an agreement to avoid double taxation, thanks to which income from work in Germany can be exempt from taxation in Poland, but influence the tax rate of your Polish business activity.
In practice, this means that your income from business activity in Poland is taxed at a rate calculated considering earnings in Germany, but you pay tax on employee work only in Germany. Due to the double taxation avoidance agreement between Poland and Germany, the so-called exemption method with progression is applied. This means that income from employment in Germany is not subject to taxation in Poland, but is considered when calculating the tax rate for Polish income.
This is exactly why work in Germany and business activity in Poland require a strategic plan for ZUS and taxes — if you organize the documents well and choose the right settlement method, you avoid stress and gain the confidence that your finances are under control.
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Can you work in Germany and run a company in Poland? Check this before going abroad
It’s no secret that many people wonder if it is possible to run a company in Poland and take up work in Germany at the same time. The good news is that it is completely legal, but requires you to arrange formalities to avoid unnecessary problems with authorities in both countries. It is crucial to remember that you tax income from business activity in Poland in our country, and settle income from work in Germany in Germany. However, it’s worth knowing that both elements influence your tax threshold and rate in Poland.
It is also important to understand that business activity in Poland and work in Germany do not exclude each other in the field of social insurance. To avoid paying contributions in two countries, you must have an A1 certificate that confirms you are subject to the Polish social insurance system while working in Germany. The A1 document is particularly important if you plan temporary cross-border work and want to maintain continuity of insurance at ZUS. Remember that filing an A1 application with ZUS and informing the employer in Germany about holding this document allows you to avoid a situation where you pay double pension and health insurance contributions, which directly affects your finances.
A1, ZUS, and German income tax — what do you need to settle to prevent overpayments?
Sometimes it can seem that Polish business activity and work in Germany is too complicated a combination to manage, but much depends on the proper preparation of documents and knowledge of procedures. If you have a company in Poland, you must pay ZUS for this activity — and here appears the key role of the A1 certificate. Thanks to it, you confirm that you are subject to the Polish social insurance system, even if you take up employment in Germany, which exempts you from the obligation to pay social insurance contributions in Germany.
Regardless of holding the A1 certificate, the German employer deducts your income tax. You cannot avoid this, but you can prepare accordingly for annual settlements. If you are interested in work in Germany and business activity in Poland ZUS, remember that you need to settle income in Poland using the method to avoid double taxation. Income from Germany can be exempted from taxation in Poland, but is considered in calculating the tax rate for income from your activity. Such an approach allows you to maintain order in settlements and avoid unnecessary stress, ensuring that you do not pay more taxes than necessary.
Business activity in Poland, work in Germany — how do you choose the best settlement method?
For many people who run a company in Poland and work in Germany, the biggest challenge is choosing the appropriate tax and insurance settlement method. There is no one-size-fits-all ideal, but there are proven steps that can ease this task. Above all, you need to know that in the case of business activity in Poland and work in Germany, the application of the double taxation avoidance agreement is necessary so that you do not pay taxes twice for the same income.
In the case of business activity in Poland, you must pay ZUS contributions, but you can use start-up aid or the Small ZUS Plus, which allows for lowering the amount of contributions. If you are employed in Germany, you will not avoid income tax, but you can monitor your tax class and available deductions that allow you to lower monthly advances. Being aware of how Polish business activity and work in Germany function will enable you to make the best tax decisions and avoid chaos in finances.
5 steps that allow you to combine a company in Poland with work in Germany without tax chaos
Before deciding on such a work model, it is good to know specific steps that help you avoid stress and chaos in settlements. First, start by establishing a business activity in Poland through CEIDG and choose the appropriate form of taxation and contribution payment at ZUS.
Then submit an application for issuing the A1 document, which allows you to maintain subordination to the Polish social insurance system while working in Germany. The third step is to take up work in Germany and fulfill the formalities related to registration in the tax system and health insurance with the German employer.
Once you have organized the basic formalities, remember to submit the PIT declaration in Poland each year using the double taxation avoidance method, and deliver the tax declaration in Germany or the confirmation of income tax deduction by the employer. Finally, control the deadlines and keep all documents confirming your income, taxes, and contributions to prove the correctness of the settlements in the event of an audit.
Settlements between Poland and Germany can seem complicated, but they don’t have to be. With our tax settlement app Taxando, you do it quickly, in Polish, and without stress — it is invaluable help if you want to have order in taxes and get back money you are entitled to.
Maciej Wawrzyniak
In his private life, Maciej enjoys sporting challenges, playing the guitar, and swimming in the lake. He is also the proud father of three sons.
