Navigating Sole Proprietorship Taxation and Contributions in Poland

Personal Income Tax

You’ve got three main options for how your income will be taxed:

1. Tax Scale
   • This method is based on your profit (income minus expenses).
   • It’s great if you want to take advantage of tax reliefs, deductions, or even file jointly with your spouse.
   • The rates are:
     • 0% for the first 30,000 PLN you earn.
     • 12% for anything between 30,000 PLN and 120,000 PLN.
     • 32% for income over 120,000 PLN (on the surplus).
2. Flat Tax
   • Also based on profit, this is a good choice if you have high income and significant costs.
   • The rate is a simple 19%, no matter how much you earn.
3. Lump Sum Tax
   • This option is based on income, not profit—so you can’t deduct your expenses.
   • Your tax rate depends on what you do:
     • Example: Doctors (14%), Programmers (12%), Commercial sellers (3%).
   • In total, there are 9 rates: 2%, 3%, 5.5%, 8.5%, 12%, 12.5%, 14%, 15%, 17%.

Important: If you choose the tax scale or flat tax and earn over 1 million PLN, an additional 4% solidarity tax will apply to your surplus.

Healthcare Contributions

When deciding how to pay taxes, it’s important to remember healthcare contributions:

• Tax Scale: You’ll pay 9% of your income.
• Flat Tax: The rate is 4.9% of your income, and you can deduct up to 11,600 PLN as a cost.
• Lump Sum Tax: You pay a fixed amount, which depends on your total income.

Social Insurance Contributions

Social insurance can seem tricky, but there are some ways to reduce your payments:

1. Standard Contribution
   • The full amount is 1,600.27 PLN per month.
2. Startup Relief (Ulga na start)
   • Who qualifies?
     • You haven’t run a business in the last 5 years.
     • You don’t provide services to a former employer (from the past 2 years).
   • What do you get?
     • You won’t pay any social insurance contributions for 6 months, but you’ll still need to cover healthcare contributions.
3. „Mały ZUS” (Small ZUS)
   • After your 6-month startup relief ends, you can switch to reduced contributions for the next 24 months.

We hope this gives you a clear picture of how things work. Don’t hesitate to reach out if you have questions or need more help—we’re here to make this process easier for you!