Polish Income Tax on Military Retired Pay

Military retired pay. Article 19(1) of the 1974 U.S.-Poland income tax convention exempts from tax in the other country wages, salaries and similar remuneration, "including pensions, annuities, or similar benefits," paid from one country's public funds to its own citizen for services performed as an employee of its national government in the discharge of governmental functions. That covers U.S. military retired pay paid to a U.S. citizen. The saving clause in Article 5(3) lets Poland tax its residents and citizens as if there were no convention, and Article 5(4)(b) keeps the Article 19 exemption only for individuals who are neither Polish citizens nor have Polish immigrant status. A retiree who is also a Polish citizen, or who acquires Polish immigrant status, loses the convention's protection and is taxed under Polish law, with a credit for U.S. tax under Article 20(1). What the convention does not cover. It has no article on private pensions, social security or veterans' disability payments. U.S. Social Security and VA disability compensation paid to a resident of Poland are therefore left to Polish law, with Article 20 giving a resident of Poland credit for U.S. tax actually paid; there is none on VA compensation, which is exempt from U.S. tax under 38 U.S.C. 5301. This entry does not answer how Polish law treats either.