What you need to know about taxes in Poland.
Hi, my name is Stas, and I have been living in Poland for 8 years. In this video, I will try to answer an important question: what taxes need to be paid in Poland, how to correctly pay ZUS, what benefits are available for starting a business, and what to specifically choose. Let’s get started.
Main taxes and forms of taxation in Poland
First, let’s break down what VAT is and what rates exist in Poland. The standard VAT rate is 23 percent, but there are also reduced rates. VAT is a value-added tax that you add to the price of your goods or services. It is not a profit tax, so it’s important to understand that you don’t pay it from your profit, but you simply add it to the cost of your goods or services. If you want to learn more about VAT, check out the previous video.
Forms of taxation for individual entrepreneurs
In Poland, there are three main forms of taxation for individual entrepreneurs under the EDC form (jednoosobowa działalność gospodarcza). Let’s look at each of them.
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Tax scale (szkala podatkowa)
The first form of taxation is the tax scale. In this case, taxes are calculated based on net profit. Net profit is your income minus your expenses. If your annual income does not exceed 120,000 PLN, you will pay 12% tax on net profit. However, if your income exceeds this limit, you will pay 41% on anything above that amount. This system is convenient for those who do not expect high earnings. It’s important to note that if your spouse does not work, you can increase the limit to 240,000 PLN per year.
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Flat tax (podatek liniowy)
The second form is the flat tax, also known as the lazy tax. This form of taxation is suitable for those who expect to earn more than 120,000 PLN per year. The tax rate here is 19%, plus 4.9% for ZUS. Thus, the total tax rate is 23.9%. This form allows you to write off all expenses, which makes it convenient for larger businesses.
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Turnover tax (ryczałt)
The third form is turnover tax. This system is convenient for those who prefer to pay taxes based on turnover, like in Ukraine. The tax rate varies from 2% to 17%, depending on the type of activity. For example, for trade, it is 3%, and for some services, it ranges from 15% to 17%. There is also a limit on income, which is 2 million euros per year.
ZUS: Discussing social security contributions
Now, let’s talk about ZUS, which is one of the most confusing aspects of taxation in Poland. ZUS is the social security fund, which includes pension contributions, healthcare, and other social services. In Poland, there are two types of ZUS: the old ZUS and the new ZUS, which was introduced under the Polish Deal.
What you need to know about ZUS
It’s important to understand that ZUS contributions are mandatory, and many entrepreneurs often don’t know how much they need to pay. For example, if your income is up to 60,000 PLN per year, you will have to pay a fixed amount, whereas for incomes above 300,000 PLN per year, the amount increases significantly.
Benefits for new entrepreneurs
The Polish government offers certain benefits for new entrepreneurs to help them avoid additional costs at the start. For example, for the first six months, you are exempt from paying ZUS altogether, and then in the next 18 months, the amount is reduced. This allows new business owners to focus on growth without the financial burden.
Conclusion: Choosing the right tax form
To summarize, it’s important to note that the choice of tax form in Poland depends on your goals and expected income. The tax scale may suit those who plan to earn up to 10,000 PLN per month, while the flat tax and turnover tax are more suitable for larger businesses. Don’t forget that ZUS contributions and benefits also significantly affect your financial situation.
Feedback
I hope this information has been useful for you. If you have any questions, feel free to ask them in the comments, like the video, and subscribe to the channel. Good luck with your business in Poland!
