The company does not leave with you
Company residence is decided by two rules working together. The statutory rule is simple: a company incorporated in the UK is automatically UK tax resident under section 14 of the Corporation Tax Act 2009, whatever it does and wherever its directors live, unless a double tax treaty pushes residence elsewhere. The case-law rule is central management and control, from De Beers Consolidated Mines v Howe in 1906: a company resides where its real business is carried on, which is where the highest level of control actually abides. That second rule is what Poland, like most countries, applies from its side. If you are the sole director and you now take every strategic, contractual and financing decision from a desk in Warsaw, Poland can treat the company as resident there too. Our company tax residence guide explains the test, and our guide to running a UK company from abroad covers the practicalities.
Dual residence and the treaty tie-breaker
A company that is UK resident by incorporation and Polish resident by management is dual resident, and only the treaty prevents both countries taxing its worldwide profits. The UK-Poland Double Taxation Convention entered into force on 27 December 2006 and has been modified by the Multilateral Instrument, with the modifications taking effect from 2019. For the residence article that change matters: the old automatic place-of-effective-management tie-break has been replaced by a competent-authority procedure, under which the two tax authorities must try to agree the company's residence by mutual agreement, having regard to its place of effective management, where it is incorporated and any other relevant factors. Until they agree, treaty benefits can be denied except to the extent the authorities allow. If residence is awarded to Poland, the company is treaty non-resident and, under CTA 2009 section 18, not UK resident for tax purposes. Our moving to Poland guide covers the treaty from the individual's side.
How you are taxed on what the company pays you
Once you are Polish tax resident, Poland taxes your worldwide income, so what the company pays you goes on your Polish return whichever country the company ends up resident in. Dividends and interest are taxed in Poland at a flat 19% with no tax-free allowance, with treaty credit for UK tax properly withheld. Salary for work physically done in Poland is outside UK tax once your own residence is properly broken, and is taxed on the Polish scale at 12% up to PLN 120,000 and 32% above, after the PLN 30,000 tax-free amount. Returning Poles who have been abroad for at least three years can claim the return relief, which exempts up to PLN 85,528 of employment or business income a year for four consecutive years. Your personal exit still runs through the Statutory Residence Test and, for a mid-year move, split-year treatment claimed on the SA109. Settle where the board will genuinely sit before you move.