Fear of brain drain makes Poland drop double taxation scheme[fr][de] 

Around 240,000 Poles have migrated to Britain since the opening of the UK labour market in May 2004. Since their revenues are already taxed in Britain, many of them have cut all ties with Polish authorities in order to avoid having to pay taxes twice and at a much higher Polish rate. 

The progressive tax rate in Poland ranges from 19% to 40%, whereas the rate in the UK goes from 10% to 40%. Due to lower thresholds in Poland, Poles working in the UK and earning 12,000 pounds a year have to pay the maximum tax rate of 40%. In the UK they only have to pay 22%. 

Until now, Poles who have a legal residence in Poland as well as in the UK were taxed in both countries. In the case of a worker earning 12,000 pounds a year, this meant that he or she wold be left with only 4560 pounds a year. Many Poles have therefore given up their residence in Poland in order to avoid paying taxes twice. 

Polish authorities have grown concerned about this development since many of the Poles working abroad have acquired professional and language skills. Poland wants to avoid alienating them and make sure that some of them return once the country's 16% unemployment rate improves. 

The new scheme thus seeks to end the punishing taxes system, so that Poles who work in Britain will only pay UK taxes for work done in the UK. However, Poles working in both countries will pay UK taxes on what they earn in Britain, and Polish taxes on what they earn in Poland. 

The agreement, sigend on July 20, still needs to pass both countries' Parliaments before it can become effective.