case study17 September 20269 min read

Polish Tax Residency and a Sole Proprietorship in Ukraine: A Real Case Study

The FlexInWork team breaks down a real, anonymized consultation case: a Ukrainian entrepreneur running a goods-trading sole proprietorship in Ukraine relocated to Poland under temporary protection and wasn't sure whether Ukrainian income had to be declared to the Polish tax office. We explain who becomes a Polish tax resident, what a 'zakład' (permanent establishment) is, and why the PIT-36 return with the PIT-ZG attachment is mandatory even when the income is fully exempt from Polish tax. We also cover the other side of the coin — the conflict between Polish tax residency and the right to Ukraine's simplified tax regime. There is no one-size-fits-all scheme here: every situation needs an individual review by a tax advisor.

A Ukrainian citizen under temporary protection in Poland who runs a goods-trading sole proprietorship in Ukraine and manages it remotely usually becomes a Polish tax resident — either by staying more than 183 days a year in Poland, or because Poland is where their centre of vital interests is located. A Polish tax resident must file an annual PIT-36 return with the PIT-ZG attachment for foreign income every year, even when that income is fully exempt from Polish tax under the Poland–Ukraine double taxation treaty. The exemption applies only when the business's permanent establishment (in Polish, "zakład") is actually located in Ukraine. The FlexInWork team reviewed one such case from its consulting practice — anonymized, but typical of hundreds of Ukrainian sole proprietors now living in Poland.

The Short Version

Every situation differs in the details — type of activity, the date of crossing the border, the structure of income, whether there is already income earned in Poland — and it is exactly these details that determine whether income is fully exempt, partially exempt, or not exempt at all. Below, the FlexInWork team breaks down one case from its practice, with all identifying details removed: a similar situation comes up for hundreds of Ukrainian sole proprietors who have relocated to Poland, but there is no single answer that fits everyone.

If your situation looks similar, don't base a decision on someone else's case. A review of your specific business structure, time spent in the country, and income is what FlexInWork's tax consultants provide during an individual consultation.
📧 Email: info@flexinwork.pl
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The Case: A Goods-Trading Business in Ukraine and a Move to Poland

The client has been living in Poland under temporary protection since early 2026. In Ukraine he holds a sole proprietorship (an FOP — the Ukrainian equivalent of a Polish JDG; if you're considering opening your own JDG in Poland, the FlexInWork team handles full JDG registration) in the second tax group: a goods warehouse, importing products from Germany and selling to Ukrainian customers. The warehouse is physically located in Kyiv, all customers are in Ukraine, and there are no Polish counterparties. Day-to-day management — order processing, client communication, logistics — is handled by the client's wife, who stayed in Ukraine. From Poland, the client only coordinates deliveries with the German supplier and confirms payments.

The client's question: does income earned entirely in Ukraine need to be reported to the Polish tax office, and could filing a return prompt the Polish authorities to try to tax the entire business turnover?

Who Becomes a Polish Tax Resident

Unlimited tax liability status in Poland — i.e., full tax residency — arises when at least one of two conditions is met: a person stays in Poland for more than 183 days in a calendar year, or Poland is where their centre of vital interests is located — family, permanent home, main activity. If neither condition is met, limited tax liability applies — tax is paid only on income actually earned in Poland.

An important nuance: Ukrainian citizens used to benefit from a separate rule giving priority to the centre-of-vital-interests test (sometimes also called the centre of economic interests — family, work, main assets); as of 2026 that rule no longer applies, and the general framework is used instead — residency is determined first, and then treaty rules under the Poland–Ukraine double taxation agreement are applied to foreign income. Exactly how these rules apply to your specific income structure (goods, services, dividends, rental income) is a question best answered not by an article online, but during a consultation, where the FlexInWork team reviews your actual contracts, type of activity, and length of stay.

For those who want to formally confirm their status in advance, a Polish tax residency certificate is useful (in Polish, "certyfikat rezydencji", informally called the "cyferka"). It can be requested from the Polish tax office even before the 183-day threshold is reached, if a person has genuinely moved their centre of vital interests here — this document confirms status for banks, employers, and foreign tax authorities, but whether it's worth requesting right now depends entirely on the individual situation.

Permanent Establishment ("Zakład") — the Key Concept for a Sole Proprietor with a Business Abroad

The Poland–Ukraine treaty determines which country taxes income from business activity based on the location of the "zakład" — the fixed place of business through which the business is actually run: where management decisions are made and deals are concluded. For a goods-trading business (buying and reselling physical products), what matters is where the warehouse, management, and deal-making are located. For services, IT in particular, the logic is different: income is deemed to be generated where the service provider is physically located while performing the service — so a freelancer working from a laptop in Poland is in a fundamentally different, less protected position than the owner of a goods warehouse in Ukraine.

Exactly where that line falls in your case depends on who actually signs documents, negotiates, and makes operational decisions, and from where. This is precisely the question that cannot be fully resolved in a general article: it requires reviewing specific contracts, powers of attorney, and the client's payment structure.

A Tax Return Is Mandatory Even When the Income Is Exempt

Exempting income from tax in Poland does not exempt you from the obligation to declare it. Every Polish tax resident must file an annual PIT-36 return with the PIT-ZG attachment every year, stating the country of origin of the income, its amount, and the tax already paid there — regardless of whether they have any income in Poland at all. Moreover, income exempt under the treaty still affects the tax rate (12% or 32%) applied to any income earned directly in Poland, if such income exists. If you also have purely Polish income — say, an employment contract or other personal income earned in Poland — it's worth separately checking your standard individual return as well; the FlexInWork team helps file PIT-37 and other PIT forms if your situation requires it.

There is a separate practical risk worth flagging: Polish banks report account transaction data to the tax office every quarter. Regular transfers into a Polish account combined with a zero or unfiled return is a common trigger for a tax office inquiry. If you haven't yet opened a personal account in Poland, or aren't sure how to structure transfers between a Ukrainian and a Polish account, the FlexInWork team also helps with opening a personal bank account. How to properly structure payments and which documents to keep on hand in your specific case is a question for an individual review — we've already seen dozens of variations of this case and know exactly where the tax office tends to ask questions.

Penalties, Voluntary Correction, and Assessing the Real Risk

If a return is not filed and the tax office discovers this on its own, penalties apply — ranging from a warning to a monetary fine, and the exact amount cannot be predicted in advance. If, however, a person voluntarily files a "czynny żal" (active regret) statement before an audit begins, together with the overdue return, penalties are typically waived.

But there is no universal "file or don't file" strategy — the right decision depends on the type of activity, the amount of income, whether supporting documents already exist, and how many days of residency have already passed. Weighing the real risk-benefit ratio in your specific situation is exactly what a paid consultation with the FlexInWork team is for, rather than relying on general examples from an article.

Individual Tax Rulings: When They Actually Make Sense

An individual ruling from the Polish tax authority (Krajowa Informacja Skarbowa, with a response time of up to 30 days) protects the taxpayer only if it is obtained before the action in question takes place. If a business has already been operating a certain way for some time, a ruling obtained now will have no retroactive protective effect for the period already elapsed. It therefore makes sense to request one looking forward — for example, before reaching the 183rd day of residency, or before launching a new way of working. Requesting such a ruling, like most interactions with Polish authorities, requires a Profil Zaufany (Trusted Profile electronic signature) — if you don't have one yet, the FlexInWork team helps obtain a Profil Zaufany. Whether an individual ruling makes sense at your current stage, and how best to phrase the request, is best decided together with a consultant who can see the full picture.

The Hidden Conflict: Polish Residency vs. Ukraine's Simplified Tax System

There's another point that often gets overlooked when the discussion focuses only on the Polish side. In Ukraine, the right to remain on the simplified tax system (groups 1–3, the "single tax") is formally tied to Ukrainian tax residency status. If a person becomes a Polish tax resident — meaning they lose Ukrainian tax resident status under Ukrainian rules — they in theory also lose the right to use the simplified tax regime in Ukraine.

In practice, many sole proprietors keep paying the single tax even after relocating, until the Ukrainian tax authority detects the change in tax residency — there is currently no automatic mechanism for verifying this directly. But this creates a dual risk: on one side, questions from the Polish tax office about undeclared foreign income; on the other, risk from the Ukrainian tax authority regarding the legitimacy of using the simplified tax regime after losing Ukrainian residency. These two risks need to be assessed together, not separately, and the right approach depends on the specific business structure, citizenship, residency status, and plans to return — this is a topic for an individual consultation with FlexInWork, not a general recommendation that applies to everyone.

The Alternative Path: Closing the Ukrainian Sole Proprietorship and Opening a Polish JDG

So far, this article has focused on one path: keep the Ukrainian FOP running, and correctly declare its income in Poland. But for someone who has genuinely relocated their life and day-to-day work to Poland — physically coordinating suppliers, clients, or operations from here on an ongoing basis rather than occasionally — there is a second, often cleaner path worth naming explicitly: closing or pausing the Ukrainian sole proprietorship and transitioning the economic activity to a Polish JDG (jednoosobowa działalność gospodarcza).

The reasoning is straightforward. When a Ukrainian entrepreneur performs services or effectively manages the business while physically based in Poland, Polish tax authorities frequently end up treating that income as locally sourced regardless of where the FOP is formally registered — which is exactly the permanent-establishment risk described above. Running a remote Ukrainian FOP from Poland also creates friction beyond taxation: Ukrainian social contributions and Polish ZUS obligations can end up overlapping, and cross-border invoicing between a Ukrainian FOP and Polish counterparties adds administrative and VAT complexity that a locally registered JDG avoids entirely.

This alternative is not automatically better for every case. For the goods-trading business described above, where the warehouse, staff, and client base genuinely remain in Ukraine, keeping the Ukrainian FOP and correctly filing PIT-36/PIT-ZG is often the right answer. But for a business that has, in practice, already shifted its centre of gravity to Poland — services, consulting, remote work performed from a Polish address — opening a Polish JDG and winding down the Ukrainian FOP removes the residency and permanent-establishment ambiguity altogether, rather than managing it year after year. The FlexInWork team handles both sides of this transition: JDG registration in Poland, and, once the new structure is running, ongoing monthly accounting. Which path fits your business is a decision worth making with a consultant who can see your actual client base, contracts, and time split between the two countries — not a general rule from an article.

What to Do If Your Situation Looks Similar

Every detail — the date of crossing the border, the type of activity (goods, services, dividends), whether there is already income in Poland, the structure of powers of attorney — changes the final calculation. A general article can show the logic, but it cannot replace a review of your specific income structure, timeline, and documents. If you're considering partially relocating your activity to Poland and will later need monthly accounting services or a virtual office in Warsaw to register a business, the FlexInWork team supports that stage too.

Book a consultation with FlexInWork's tax specialists to get a step-by-step plan tailored to your situation — which documents to prepare, which return to file and when, and how to structure your business to avoid penalties and unnecessary questions from the tax office.
📧 Email: info@flexinwork.pl
💬 WhatsApp: +48 794 323 643
✈️ Telegram: +48 794 323 643

Want to review your specific situation? Get in touch, and we'll find a convenient time for a consultation:

📧 Email: info@flexinwork.pl
💬 WhatsApp: +48 794 323 643
✈️ Telegram: +48 794 323 643

FlexInWork is a company supporting business setup and legalisation for Ukrainians in Poland — from JDG and Sp. z o.o. registration to accounting, tax returns, and residency matters. Full catalogue of business services — flexinwork.pl/en/b2b/, and for individuals — flexinwork.pl/en/b2c/.

Frequently Asked Questions

Which Ukrainians with a sole proprietorship in Ukraine become Polish tax residents?

A person becomes a Polish tax resident if they spend more than 183 days in Poland in a calendar year, or if their centre of vital interests is here — family, permanent home, main sphere of activity. For someone whose family has moved to Poland while the business physically remains in Ukraine, resident status often arises regardless of where the business is located — but that status alone does not mean Ukrainian income will end up taxed by Poland: that's a separate question governed by the treaty between the two countries. Calculating your exact number of days and assessing your specific case is what the FlexInWork team reviews during a consultation, looking at entry/exit dates, family structure, and type of activity.

Do I need to file a return in Poland if all my income was earned in Ukraine and tax was already paid there?

Yes, a return must be filed regardless — the reporting obligation does not depend on whether the income ultimately ends up taxed in Poland. A resident files PIT-36 with the PIT-ZG attachment, stating the country of origin of the income and the tax already paid there, even if it is fully exempt under the treaty. Banks report account transaction data to the tax office quarterly, so skipping the filing while receiving regular transfers is a risky strategy. How to properly complete your specific return, taking your type of income into account, is something we'll discuss during a FlexInWork consultation.

What is a "zakład" (permanent establishment) and why is it the central concept in these cases?

A zakład is a fixed place of business through which a business is actually run: where management decisions are made and deals are concluded. Its location is exactly what determines which country taxes income from business activity. For a goods-trading business, what matters is where the warehouse and management are located; for services, it's the physical location of the service provider while working. The precise line between "coordinating a delivery from Poland" and "managing the business from Poland" depends on details we review individually — there is no one-size-fits-all answer here.

How does a goods-trading business differ from IT services or freelance work in terms of Polish tax residency?

For services, income is considered generated wherever the service provider is physically located while performing the work — so an IT specialist working from Poland pays Polish tax regardless of where their sole proprietorship is registered. For a goods-trading business, what matters is the location of the warehouse, staff, and where deals are made — not the owner's physical location at any given moment. This creates a fundamentally different level of risk for the two business types. If you have a mixed model (say, goods plus consulting), it's worth clarifying the correct classification during a consultation — your entire reporting strategy depends on it.

How do you actually prove that a business is managed from Ukraine and not from Poland?

The evidentiary basis is built from several elements: who signs and executes deals under a power of attorney, where operating expenses are paid from, where contracts and invoices are issued, and whether there's confirmation of Ukrainian tax resident status. No single document guarantees protection on its own — what matters is the combination, and how it's structured specifically for your business. What exact set of documents you need and how to properly set up powers of attorney the first time is something we work through in detail during a FlexInWork consultation, rather than assembling it after the fact in response to a tax office request.

What happens if I don't file a return on foreign income at all?

With regular transfers into a Polish account and no return filed, the risk of detection is fairly high — banks report transaction data to the tax office every quarter. If detected, individually-sized penalties apply, but filing a late return yourself through the czynny żal mechanism before an audit begins usually helps avoid penalties. Weighing which approach is better in your situation — filing now, waiting and correcting later, or not filing at all — should only be done once a consultant has seen the full picture of your income and timeline, not based on general logic from an article.

Does it make sense to request an individual tax ruling in advance for my situation?

A ruling from the Polish tax authority only protects you if it's obtained before the actions it describes take place — it has no retroactive effect for a situation that has already been ongoing. It's therefore worth requesting in relation to future steps, for example before relocating part of your activity to Poland. Whether a ruling is appropriate at your current stage, and how to phrase it properly, is a question best resolved individually during a consultation.

Up to what income level can you operate in Poland without registering a JDG?

Poland allows unregistered activity (działalność nierejestrowa) without opening a JDG, provided the activity doesn't require a licence and monthly income doesn't exceed 225% of the minimum wage. Even within that threshold, income must be reported on your tax return and tax must be paid on it — the exemption applies only to registration, not to reporting. Whether this is relevant for you if you're considering partially relocating your activity to Poland, and how to calculate the benefit at the outset, is something we're happy to work through together during a consultation. Once the decision is made, the FlexInWork team also handles the actual JDG registration.

How does the tax office find out that someone is actually living abroad?

The main source of information is banks: they report account transaction data to the tax office every quarter, along with the residency status declared when the account was opened. Additional information can come through data exchange between EU countries and migration record systems (address registration, temporary protection status, PESEL number). This doesn't mean every border crossing is individually tracked, but the combination of banking data and migration status makes a person's presence pattern reasonably transparent to the tax office in the event of a selective audit. How to minimize inconsistencies in your particular case is something we can discuss during a consultation.

Who is not allowed to open or keep running a sole proprietorship in Ukraine after moving abroad?

Temporarily living abroad does not by itself prohibit having an active sole proprietorship in Ukraine — entrepreneurship itself is not tied to physical location. The restriction doesn't arise at the level of FOP registration, but at the level of the right to use the simplified tax system: as noted above, losing Ukrainian tax resident status formally removes the right to apply the simplified regime for groups 1–3. It's also worth separately checking restrictions related to the type of activity and single-tax group — some activities don't qualify for the simplified regime regardless of the entrepreneur's place of residence. Getting a precise assessment for your group and type of activity is best done individually.

Is there a tax-free threshold for transfers from abroad in Poland?

There is no universal "tax-free transfer from abroad" limit under Polish law — what matters isn't the amount of the transfer itself, but the nature and source of the income it represents. A transfer that represents business income through a permanent establishment in another country is declared on PIT-ZG and may be exempt from Polish tax under the treaty; a transfer that represents, say, Polish-source income or is not documented may be treated differently. Don't confuse the unregistered-activity threshold (działalność nierejestrowa, roughly 225% of the minimum wage) with a transfer limit — these are different mechanisms. Working out exactly how your specific transfer is classified is a matter for a consultation.

Can a Ukrainian citizen legally set up and run a sole proprietorship (JDG) in Poland?

Yes. Ukrainian citizens, including those under temporary protection, can register a JDG in Poland on essentially the same terms as Polish citizens under the special-law provisions adopted since 2022, and running a business as a sole trader is one of the most common ways Ukrainians in Poland formalise self-employment. The main practical downside of a sole proprietorship as a legal form — in Poland as elsewhere — is unlimited personal liability: unlike a limited company, there is no separation between business debts and the owner's personal assets. For someone whose activity has genuinely moved to Poland, registering a JDG here removes exactly the residency and permanent-establishment ambiguity discussed above. The FlexInWork team handles JDG registration end to end.

Does Poland have a double taxation treaty with the United States, and does that matter here?

Yes, Poland and the United States have a double taxation avoidance agreement, one of a wide network of such treaties Poland maintains — the Poland–Ukraine treaty discussed throughout this article works on the same underlying logic (residency, permanent establishment, treaty-based relief) as the Poland–US one, even though the specific provisions differ. If your income sources span more than two countries — for example Ukrainian business income plus US-sourced income or investments — the interaction between multiple treaties needs to be reviewed together, not treaty by treaty in isolation; this is exactly the kind of multi-jurisdiction question worth bringing to a consultation rather than resolving from general guidance.

Do foreigners have to pay tax in Poland at all?

Yes — foreigners are taxed in Poland exactly like Polish citizens once the same residency tests apply: a foreign national who becomes a Polish tax resident (183+ days, or centre of vital interests in Poland) is taxed on worldwide income under the same rules described throughout this article, while a foreign national who does not meet either test is taxed in Poland only on Polish-source income under limited tax liability. Citizenship itself is not the determining factor — residency status is. This is precisely why the 183-day count and the centre-of-vital-interests assessment matter so much for Ukrainians in Poland: they are the two tests that decide whether worldwide income, including Ukrainian business income, becomes reportable in Poland at all.

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