The Belka tax on bonds - what you actually keep

For an individual Polish tax resident investing outside a business, in an ordinary account without a specific exemption, bond interest and discount are generally subject to 19% Polish PIT. Tax is usually withheld by the payer. A gross coupon of 8.00% then does not mean 8.00% cash after tax. A passport or residential address alone does not establish tax residence.

For interest actually taxed at 19%, net interest can be approximated as 81% of gross interest. An 8.00% interest rate gives 6.48% after tax in that simplified case. This is not a universal formula for net YTM: purchase price, accrued interest, tax timing, compounding and redemption or sale gains can change the result. A nonresident first needs to establish the applicable tax treatment.

A specific trap appears when buying a bond with accrued interest. The buyer pays the seller the dirty price, meaning clean price plus interest accrued since the previous coupon. At the next coupon date, tax may be withheld on the whole coupon even though part of it was economically handed to the seller in the purchase price.

The closer to the coupon date you buy, the larger accrued interest usually is. Over a short holding period this can materially change the net result, so compare after-tax yield and check the coupon calendar, not only clean price and annual coupon.

Tax treatment can depend on account type, tax residence and instrument. This article explains investor mechanics; it is not tax advice or an individual tax interpretation.

For tax nonresidents, Article 21(1)(130c) of the Polish PIT Act exempts interest or discount on bonds with a maturity of at least one year admitted to a regulated market or alternative trading system in Poland or a qualifying treaty country. The exception concerns issuer-related investors whose combined holdings with related parties exceed 10% of nominal value. It does not automatically exempt sale gains or unlisted retail savings bonds. The payer should confirm eligibility for the specific series.

Also check the issue date: Article 44 of the Act of 23 October 2018 applies this exemption to series issued after 31 December 2018. For older State Treasury series, Article 21 of the Act of 7 October 2022 extends application to payments after 31 December 2022; other exemption conditions still require checking. Applying a treaty rate or withholding exemption requires attention to the tax-residence certificate. A CRS self-certification does not replace that certificate. Before payment, establish the required documents, withholding procedure and available payment statements with the payer. Separately check duties in your tax-residence country; Polish relief does not determine foreign tax.