Change of Tax Residency During a Tax Year – Split Tax Residency

Polish tax law contains what appears to be a categorical norm in Article 3(1a) of the Personal Income Tax Act: any person staying in Polish territory for more than 183 days in a tax year is a tax resident. Conversely, tax practice and jurisprudence have long recognised the possibility of changing residency during the year – the so-called split tax residency.

How can these seemingly mutually exclusive concepts be reconciled? The answer lies in a deeper analysis of the normative structure, hierarchy of criteria, and teleological interpretation of tax residency provisions.

I. Normative Foundations of Tax Residency

Construction of Article 3(1a) of the Personal Income Tax Act

The provision states that a natural person having a place of residence in Polish territory is deemed to be a person who:

1. has in Polish territory the centre of personal or economic interests (centre of vital interests), or
2. stays in Polish territory for more than 183 days in a tax year.

The conjunction “or” is of crucial significance – it creates two autonomous, equivalent and disjunctive prerequisites. This is not a cumulative construction but a disjunctive alternative, where each prerequisite may operate independently.

Unlimited Tax Liability – Consequence, Not Cause

Article 3(1) of the Personal Income Tax Act provides that persons having a place of residence in Poland are subject to tax liability on the entirety of their income (unlimited tax liability). This is a consequence of having residency, not an additional criterion for acquiring it.

The Ministry of Finance in its 2021 tax explanations clarifies that unlimited tax liability means that a natural person who is a Polish tax resident is subject to taxation in Poland on the entirety of income earned, regardless of the location of income sources.

II. Change of Tax Residency – Theoretical Foundations

Admissibility of Change During the Year

The Ministry of Finance’s 2021 tax explanations expressly recognise that a change of tax residency may occur during a tax year. In such cases, a natural person is subject to unlimited tax liability in Poland for the period during which they were a Polish tax resident.

An interpretation by the Director of the National Tax Information (KIS) dated 4 February 2025 (ref. 0114-KDIP3-2.4011.944.2024.2.JM) goes further, recognising as correct the taxpayer’s position: “The fact of the admissibility of split tax residency is undisputed.”

Prospective Effect of Change

Key to understanding the mechanism of split residency is the prospective, not retroactive effect of status change. The 2025 KIS interpretation specifies: “From the day of arrival in Poland, the taxpayer becomes a Polish tax resident.”

There is therefore no question of retroactive effect for the entire tax year. The change operates from the moment of actual transfer of the centre of vital interests or exceeding the 183-day threshold.

III. Split Tax Residency – Legal Mechanism

Definition and Essence of the Phenomenon

Split tax residency occurs when a natural person changes their tax residency during one tax year. For part of the year they are a resident of one state, for the remaining part – of another.

In the Polish legal system, this means:

• Until the moment of change: unlimited tax liability in the country of residence
• After the change: limited tax liability (only from Polish sources) or unlimited (if Poland becomes the country of residence)

Practical Scenarios of Split Residency

Scenario 1: Departure from Poland

• January-August: work and life in Poland (resident)
• September: relocation of entire family to Germany
• September-December: centre of life in Germany (non-resident for Poland)
• Result: split residency 8/4 months

Scenario 2: Arrival in Poland

• January-May: life and work in Spain
• June: transfer of centre of interests to Poland
• June-December: Polish residency
• Result: from June unlimited tax liability in Poland

Documenting Split Residency

Given the possibility of disputes with the tax authorities, precise documentation of the moment of change is advisable:

1. Tax residency certificate from the new country
2. Evidence of transfer of centre of interests (lease agreements, family relocation)
3. Update of registration and address data
4. Documents confirming the change (tickets, removal invoices)

IV. Hierarchy of Criteria – Key to Resolving the Paradox

Why Does Centre of Vital Interests Override the 183-Day Criterion?

The answer lies in the hierarchical structure of criteria developed by jurisprudence and confirmed in tax explanations.

1. Primacy of Qualitative Over Quantitative Criterion

The Supreme Administrative Court in judgment II FSK 2653/16 stated: “When assessing where the taxpayer’s centre of vital interests is located, all personal and economic connections should be taken into account, not just the length of stay.”

Ratio legis: The legislator deliberately placed the centre of interests criterion first, giving it interpretative primacy. The 183-day criterion is auxiliary – it applies when the centre of interests cannot be unambiguously determined.

2. Teleological Interpretation of the Provision

The purpose of residency provisions is to assign a person to the tax system of the state with which they are actually connected. Mechanical counting of days may lead to absurd results contrary to economic reality.

Example from jurisprudence: Provincial Administrative Court in Kraków (I SA/Kr 579/23) – an artist staying more than 183 days in the USA remained a Polish resident due to:

• Art studio in Poland
• Family residing in Poland
• Assets and social activities in Poland
• Merely temporary nature of stay in the USA

3. Functional Interpretation of the Conjunction “Or”

The conjunction “or” in Article 3(1a) does not create equivalent criteria but establishes a hierarchy:

• Primary criterion: centre of vital interests (qualitative test)
• Subsidiary criterion: 183 days (quantitative test, when unambiguous centre is lacking)

V. Mechanism for Overriding the 183-Day Automatism

Stage 1: Determining Actual Centre of Interests

Tax authorities apply a multi-factor test:

Centre of personal interests (most important):

• Place where family stays (spouse, minor children)
• Domestic hearth (accommodation permanently available)
• Social and cultural ties
• Membership in organisations

Centre of economic interests:

• Location of main source of income
• Location of assets
• Centre of business management
• Bank accounts and investments

Stage 2: Verification of Centre Dominance

If the centre of interests is unambiguous and dominant, exceeding 183 days in another country does not change residency. Ministry of Finance explanations: Where a taxpayer has a centre of vital interests in Poland, they will be a Polish tax resident even if they stay abroad for more than 183 days.

Stage 3: Application of Time Criterion

Only when the centre of interests cannot be unambiguously determined (e.g., equivalent connections with two countries) is the 183-day criterion applied as decisive.

VI. Double Taxation Avoidance Agreements – Additional Override Mechanism

Tie-Breaker Rules as Overriding Mechanism

International agreements introduce their own hierarchy of criteria (Article 4 of the OECD Model Convention):

1. Permanent home – where a person has a home permanently at their disposal
2. Centre of vital interests – closer personal and economic ties
3. Habitual abode – where they usually stay
4. Nationality
5. Agreement between states

Key principle: International agreements take precedence over domestic law (Article 91 of the Polish Constitution).

Practical Application – The Case of Ms Renata

An example from Ministry of Finance explanations illustrates the mechanism:

• 8 months of work in Spain (exceeding 183 days)
• Spain recognises her as resident under domestic law
• Tie-breaker procedure: family in Poland = centre of personal interests
• Result: Polish residency despite 240 days in Spain

VII. Logical Construction of Paradox Resolution

Synthesis – Why There Is No Contradiction

The paradox between 183-day automatism and split residency is apparent. The solution rests on three pillars:

1. Different Temporal Moments

• 183-day criterion: operates prospectively from the moment of exceeding the threshold
• Centre of interests: may change at any moment during the year
• Effect: possible change of residency during the year (split residency)

2. Hierarchy of Norms

• Level 1: International agreements (constitutional precedence)
• Level 2: Centre of interests criterion (qualitative test)
• Level 3: 183-day criterion (auxiliary test)

3. Teleology of the Provision

The purpose of residency provisions is to assign a person to the appropriate tax system based on actual connections, not mechanical counting of days.

VIII. Decision-Making Algorithm for Tax Authorities

1. Is there a double taxation avoidance agreement?

• YES → Apply tie-breaker procedure
• NO → Proceed to point 2

2. Can the centre of vital interests be unambiguously determined?

• YES → Residency according to centre of interests (regardless of number of days)
• NO → Proceed to point 3

3. Does the person stay in Poland > 183 days?

• YES → Polish residency from the day of exceeding the threshold
• NO → No Polish residency

4. Has there been a change of centre of interests during the year?

• YES → Split residency from the date of change
• NO → Residency throughout the year according to established criterion

This analysis demonstrates that the apparent conflict between the categorical 183-day rule and the flexibility of split residency is resolved through proper understanding of the hierarchical structure of tax residency criteria, where qualitative factors (centre of vital interests) take precedence over quantitative measures, and where changes in residency status operate prospectively rather than retroactively.

Robert Nogacki

Founder and Managing Partner of Skarbiec Law Firm, recognized by Dziennik Gazeta Prawna as one of the best tax advisory firms in Poland (2023, 2024). Legal advisor with 19 years of experience, serving Forbes-listed entrepreneurs and innovative start-ups. One of the most frequently quoted experts on commercial and tax law in the Polish media, regularly publishing in Rzeczpospolita, Gazeta Wyborcza, and Dziennik Gazeta Prawna. Author of the publication “AI Decoding Satoshi Nakamoto. Artificial Intelligence on the Trail of Bitcoin’s Creator” and co-author of the award-winning book “Bezpieczeństwo współczesnej firmy” (Security of a Modern Company). LinkedIn profile: 18 500 followers, 4 million views per year. Awards: 4-time winner of the European Medal, Golden Statuette of the Polish Business Leader, title of “International Tax Planning Law Firm of the Year in Poland.” He specializes in strategic legal consulting, tax planning, and crisis management for business.