Individuals operating a sole proprietorship or partnering in a civil or commercial partnership can choose from several available forms of taxation: tax scale (so-called general principles), flat-rate scheme, lump sum on recorded income or – in the case of continuing this form before 2022 – tax card. This choice is important because it affects not only the amount of tax due, but also the availability of reliefs, the method of calculating ZUS contributions (in particular health insurance contribution) and the scope of accounting obligations. See what taxes in Poland are in 2025.
What are the current forms of taxation in Poland?
Currently, individuals conducting non-agricultural business activity in Poland can choose one of three available forms of income taxation:
- Taxation on general principles (tax scale)
This is the basic form of taxation, in which income is taxed according to the progressive PIT scale:
– 12% for income up to PLN 120,000,
– 32% for the surplus over PLN 120,000.
The tax is calculated on income, i.e. on revenue reduced by the costs of obtaining it. In this form, you can use most tax reliefs and joint settlement with your spouse. In addition, entrepreneurs can reduce their income by the value of ZUS contributions for social insurance paid in a given settlement period (month or quarter). From July 2022, it is not possible to reduce income by the middle class relief, because this relief has been abolished.
- Flat tax 19%
In this option, income is taxed at a flat rate of 19%, regardless of its amount. As with the scale, tax is calculated on income (income minus costs). The disadvantage of this form is the inability to use some tax reliefs and the inability to file jointly with a spouse or child. Importantly, not everyone can use this form of taxation. One of the reasons why it is not possible to use the flat tax is the provision of services to a former or current employer. This applies to services of the same nature as the work that the taxpayer performed or performs for him on a full-time basis. This limitation applies within the same tax year.
- Lump sum on recorded income
This is a simplified form of taxation, in which tax is calculated on income, without the possibility of deducting costs. The flat rates are varied and depend on the type of business activity performed – they range from 2% to 17%. This form is beneficial for entrepreneurs with low costs of obtaining income.
In order to benefit from the lump sum on recorded income, taxpayers must meet the appropriate conditions, including:
– not exceeding a certain turnover limit (EUR 2,000,000);
– the type of business they conduct may be taxed as a flat-rate tax;
– not performing (and not performing in the previous year) services for a current or former employer.
Note:
The tax card, although still in existence, is no longer available to new entrepreneurs – it can only be used by people who chose this form before 2022 and continue to do so without interruption.
What taxes in Poland for foreign and domestic entrepreneurs?
To help you understand what taxes entrepreneurs pay in Poland, we have created a list of the most important fiscal burdens:
- Income tax – this is the basic tax on entrepreneurs. In Poland, it comes in two variants:
– PIT (personal income tax) – applies to individuals running a sole proprietorship and partners in civil and partnerships (except those subject to CIT),
– CIT (corporate income tax) – applies to limited liability companies, joint-stock companies, simple joint-stock companies, as well as some limited and general partnerships, if the appropriate conditions are met.
- VAT (value added tax) – most entrepreneurs must account for VAT. The standard rate is 23%, but there are also reduced rates (8%, 5%, 0%) or exemptions – depending on the type of products and services offered.
- Civil law transaction tax (PCC) – may apply in the case of civil-law transactions, such as purchase and sale, loan or donation.
- Property tax – entrepreneurs who own real estate used for business must pay this tax, the amount of which is set by local governments.
- Social Insurance Institution contributions – although formally not a tax, the obligation to pay social and health insurance contributions is a permanent financial burden. Their amount depends, among other things, on the chosen form of taxation and the income generated.
Depending on the nature of the business, the entrepreneur may also be required to pay other taxes, e.g. withholding tax if they cooperate with foreign contractors.
How to calculate corporate income tax in Poland?
You know what taxes in Poland are current. See how to estimate your tax charges. Calculating tax for a company depends on the form of taxation and the type of tax. In the case of income tax (PIT or CIT), you need to calculate the income, which is the difference between revenue and business costs. Then, based on the selected form of taxation, the tax amount is calculated.
See how it looks in a simple example:
In November, an entrepreneur achieved revenue of PLN 80,000, and costs amounted to PLN 30,000.
- CIT example: Small taxpayer (tax rate is 9%)
Income amounted to: PLN 80,000−PLN 30,000=PLN 50,000
Advance payment on income tax is: PLN 50,000∗9%=PLN 4,500 (excluding dividend tax of 19%).
- PIT Example Tax scale
Income amounted to: PLN 80,000−PLN 30,000=PLN 50,000
Advance payment of income tax amounted to: PLN 50,00012%=PLN 6,000 (above PLN 120,000 of income, the applicable rate is 32%). PIT Example Straight-line method Income amounted to: PLN 80,000−PLN 30,000=PLN 50,000 Advance payment of income tax amounted to: PLN 50,00019%=PLN 9,500
- PIT Example Flat-rate – 8.5% rate
Income amounted to: PLN 80,000 (no possibility of settling costs)
Advance payment of income tax amounted to: PLN 80,000*8.5%=PLN 6,800
The above calculations are of course examples and are intended to show how to calculate the advance payment of income tax. However, given that taxes in Poland are a very complex topic, we strongly recommend consulting a tax advisor or legal expert. Our law firm, CMM, based in Wrocław, is ready to assist you in choosing the most suitable tax solution for your business.
What tax obligations does an entrepreneur have?
An entrepreneur has a number of tax obligations, which include not only timely payment of taxes due, but also proper maintenance of financial records, enabling settlement with offices. Key obligations include:
- Keeping accounts – depending on the chosen form of business activity, an entrepreneur may be required to keep full accounting (e.g. in the case of capital companies) or simplified records (e.g. sole proprietorship). Proper bookkeeping in accordance with applicable regulations is the basis for reliable tax settlements.
- VAT settlement – if the entrepreneur is an active VAT payer, they must regularly submit appropriate declarations (monthly or quarterly) and pay the tax due to the tax office.
- Paying income tax advances – during the tax year, the entrepreneur is required to pay income tax advances monthly or quarterly, calculated on the basis of the income earned. After the end of the year, you must file an annual tax return (PIT or CIT), showing revenues, costs, advances paid and final income. Additionally, if you employ employees, you must also settle advances for their income tax. ZUS contributions – In addition to tax obligations, an entrepreneur is also required to pay social and health insurance contributions – both for themselves (if the regulations provide for this) and for their employees.
As you can see, the tax obligations of entrepreneurs are significant, which is why it is worth taking care of the appropriate support in the form of a legal and tax office at the beginning of your business. This will not only allow you to avoid costly mistakes, but also focus on developing your business, with the certainty that all formalities are carried out in accordance with the applicable regulations.
