Poland, UK to sign migrant tax deal

Poland and Britain will sign a tax deal on Thursday which will relieve hundreds of thousands of Poles working in Britain from Polish tax liabilities which discourage many from returning home.

Britain was one of the few European Union members to fully open its labour market to eastern European EU newcomers in 2004 and about a quarter million Poles have officially registered there, with some estimates putting the figure much higher.

Under current laws expatriates pay British income tax, but if the same income would lead to higher taxes in Poland, have to make up for the difference on returning home.

The new agreement will scrap this obligation.

"Once this agreement is signed, the situation of Poles working in Britain will improve," Deputy Finance Minister Jaroslaw Neneman told Reuters. "(Under it) British income will not be taxed in Poland at all." Every week, thousands of Poles board planes, buses and trains to seek work. A large proportion head for Britain and Ireland.

Warsaw has become increasingly worried about a "brain drain" as many skilled Polish workers have gone abroad in search of higher incomes. The central bank has also expressed about bottlenecks in the labour market pushing up wages.

Many Poles plan to return home at some stage, hoping to invest their earnings in business or real estate, but the current tax agreement has acted as a strong disincentive.

The Rzeczpospolita newspaper calculated that a manager making 77,000 pounds a year in London would have to pay 31,000 zlotys at home in addition to UK tax.

For a waitress making 18,000 pounds, the extra tax comes in at 15,000 zlotys, a staggering 70% of the UK tax she would pay.The agreement will have to be ratified by both countries' parliaments to come into force, possibly from the start of 2007.

Both opposition parties at home and the Polish community in Britain have long lobbied for a new deal.

Source:tvnz.co.nz