publication
2026-03-11 10:10
The conflict in Iran and the resulting tensions in the Middle East region may become a catalyst for revising the tax status of many Poles residing in the United Arab Emirates (UAE). Mass requests for consular support and evacuation may constitute an important reason for tax authorities to question the effectiveness of transferring the center of life's interests abroad.
The geopolitical situation forced many people declaring residence in Dubai to decide to return to Poland. From the perspective of tax law, these activities verify the actual location of concentration of taxpayers' personal and economic interests.
For years, the United Arab Emirates tempted with a zero personal income tax (PIT) rate. Although a 9% corporate tax (CIT) has recently been introduced there for companies exceeding a certain income threshold, this offer is still unrivaled when compared to Polish tax thresholds, solidarity levy or high health insurance contributions that must be paid by the highest-earning citizens in the country.
Mechanism for determining tax residence
In accordance with Polish regulations and international standards, tax residence is not determined solely by the registered address or the possession of a visa in a country with a favorable tax system. The key criterion is the so-called center of life's interests. As Tomasz Prokurat, legal advisor, tax advisor and partner at the Litigato Law Firm explains:
tax residence is not determined by the address in the Emirati free zone or even the taxpayer's sincere belief that he has moved his life to Dubai. The key questions are much simpler: where his house is, where his family lives, where his children go to school, where he has a doctor, a sports club or a bank from which he repays his loan.
If most of the above-mentioned elements remain in Poland, a long-term stay in the UAE may not be sufficient to effectively change tax jurisdiction.
Crisis as an instrument of fiscal verification
The current dynamics of events in the Middle East provide the tax administration with arguments in explanatory proceedings. People expecting help from the Polish authorities in evacuation indirectly confirm the durability of ties with their home country. Tomasz Prokurat points out the potential consequences:
for many people who moved to the UAE in order not to pay tax on the sale of cryptocurrencies, shares or shares in Poland and run a business with zero PIT, the current crisis may have a very unexpected side effect – questions from the tax office about where their center of life interests actually was.
These proceedings aim to determine whether the taxpayer remained a Polish resident during the period of obtaining income abroad, which would result in the obligation to tax it in Poland.
Evidence deficit: the problem of residence certificate
A serious difficulty for taxpayers is the specificity of the Polish-Emirate double taxation agreement. In practice, obtaining a certificate of residence in the UAE, which would be binding proof for the Polish tax office, is impossible for most foreigners. There are several reasons:
- formal barriers: the agreement requires UAE citizenship to obtain full resident status within the meaning of the convention, which is an almost unattainable requirement.
- procedural risk: the lack of formal confirmation of residence makes it difficult for the taxpayer to demonstrate the effective transfer of his life center abroad in the event of a dispute, especially if he is still active in Poland.
All that glitters is not gold…
Experts emphasize that the popularity of Dubai as a tax optimization destination in recent years has been stimulated by messages on social media, which often ignore the complexity of the issue. In professional consulting, changing residence to the UAE is assessed as a high-risk solution.
As expert Tomasz Prokurat emphasizes, marketing materials in social media often ignore key barriers, such as exit tax or CFC rules, which may eliminate potential savings. When planning such an operation, it is worth considering the following issues:
- tax on unrealized profits, known as exit taxis the first barrier for individuals planning to change their tax residence from Poland to a foreign one. This levy is based on a legal fiction in which the tax office treats the moment of leaving the country as if the taxpayer had sold his personal property for a fee. The tax rate of 19% applies primarily to shares in companies, stocks and other securities, provided that their total market value exceeds the threshold of PLN 4 million. In practice, this means the need to pay tax on the increase in the value of assets, even though they have not been physically liquidated and the taxpayer has not received cash on this account.
- Controlled Foreign Entities (CFC) rules, which are designed to prevent income from being transferred to low-tax jurisdictions such as the United Arab Emirates. This mechanism makes it if a Polish resident holds significant shares in an Emirati company that generates mainly passive income (e.g. dividends, interest or royalties), the Polish tax office may demand 19% tax on the profit generated by it. This risk becomes real when the taxpayer fails to successfully prove the loss of Polish tax residence, which results in his global income being subject to unlimited tax liability in Poland.
The foundation for effective tax optimization when traveling to Dubai is a permanent and actual severance of ties with the country of departurei.e. shifting the center of life's interests. In this process, the tax office analyzes both personal and economic interests. It is crucial not only to have a permanent place of residence and stay with your family in the UAE, but also to transfer your social and medical activities there. From an economic perspective, the location of bank accounts, real estate and sources of main income are important. It should be remembered that any manifestations of maintaining strong ties with Poland – including crisis situations, such as requests for evacuation by the Polish diplomatic services – may be used by the tax authorities as evidence that the change of residence was apparent.
Tax residence is not a formality that can be changed with a single document or entry in the company register. It's primarily a matter of where you actually live – concludes Tomasz Prokurat.
Due to the above, returns from regions affected by the crisis may become the beginning of many years of disputes with tax authorities, which many taxpayers were not prepared for.
