Hello everyone! My name is Stas, and I have been living in Poland for eight years. For part of that time, I have been running a business and helping companies enter the Polish market. In this video, which became the basis for this article, I will try to clearly and concisely answer the most important question: what taxes exist for sole proprietors in Poland, and what aspects should be considered when choosing between different tax regimes.
Main Taxes for Companies in Poland
The first tax to mention is the corporate income tax. This is an important aspect every entrepreneur in Poland needs to understand. Poland’s tax system has a dual structure, which means you report net profit as a separate legal entity, and then, if you plan to pay yourself dividends or salary, you pay taxes on those payments.
Corporate Income Tax
The first important thing to understand is the corporate income tax rate. It is 9% for companies with income up to 2 million euros. It’s important to note that this refers to total revenue, not the number of transactions, which can be earned over a year or even several years. Once the amount exceeds 2 million euros, the tax rate increases to 19%. This is a key point for any entrepreneur in Poland.
VAT
The next tax is VAT, which must also be considered. The standard VAT rate in Poland is 23%, applied equally to sole proprietors and companies. However, you can avoid registering for VAT if your annual income does not exceed 200,000 PLN. So if your business activity does not require issuing VAT invoices, you might not have to register as a VAT payer.
Dividend Tax
When it comes to withdrawing money from a company, there is another important tax — dividend tax. It is 19%. Dividends are usually paid once a year, which can be inconvenient for business owners. Alternatively, payments to board members can be made, which until recently were taxed at 17%, but now this rate has increased to 26% due to changes in Polish tax law.
Summary of Company Taxes
To summarize company taxes in Poland:
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Corporate income tax: 9% up to 2 million euros, then 19%
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VAT: 23%, with exemption possible for income under 200,000 PLN
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Dividend tax: 19% or 26%, depending on the type of payment
Taxes for Sole Proprietors in Poland
Now let’s discuss sole proprietors and the taxes they face. There are several taxation options in Poland for them, similar to tax groups in other countries, such as Ukraine.
Taxation Options for Sole Proprietors
There are three main tax types for sole proprietors in Poland. The first is the progressive scale. It implies a 26% tax rate up to 120,000 PLN, after which the tax increases to 41%. This can be complicated for beginners if income exceeds those thresholds.
Flat Tax
The second option is a flat tax of 19% on net profit with no withdrawal limits. This is attractive for those expecting revenues above 120,000 PLN. Net profit is calculated as income minus all expenses, which simplifies the process.
Turnover Tax
The third taxation form is turnover tax, which can range from 2% to 17% depending on the type of activity. For example, project management services are taxed at 8%, and programming at 12%. This allows flexibility in choosing taxation depending on the business specifics.
Tax Residency
Another important aspect is tax residency. In Poland, tax residency is based on the time of residence. If you live in the country more than 181 days per year, you become a tax resident. There are also rules for those owning foreign companies, so it’s important to stay updated with laws in this changing world.
Conclusion
So, in this article, we have thoroughly reviewed taxes for sole proprietors and companies in Poland. Each option has its pros and cons, and it is important to understand which suits you best. I hope this information was useful and helps you better navigate Poland’s complex tax system. If you have questions or want additional info, feel free to reach out for a consultation. Good luck with your business in Poland!
