Entrepreneurs in Poland have until February 20th to select their form of taxation for 2026, a decision that could significantly impact their financial obligations. The choice between the progressive tax scale, the flat tax, and the lump-sum tax depends on individual circumstances, with potential differences in overall tax burdens and social security contributions, according to tax advisors.
The selection process involves submitting a declaration to the relevant tax office, either in paper or electronic form. Those utilizing the Central Register of Beneficial Owners (CEIDG) can use the “Declaration of Income Tax Payment Form,” choosing one of the three available options. Selecting a new form automatically cancels the previous one.
This opportunity is particularly relevant for individuals operating as business-to-business (B2B) contractors rather than traditional employees, contributing to the growing popularity of the lump-sum tax, which offers ten different rates depending on the profession and services provided. Monika Piątkowska, a tax advisor at e-pity, emphasized the importance of optimizing taxes through this choice, stating, “The best form of taxation for a given entrepreneur depends on their income, type of activity, and available tax reliefs.”
Piątkowska illustrated the impact of these choices with an example: a self-employed office worker, referred to as Pani Asia, would face a 12% tax rate on income exceeding the tax-free threshold under the progressive scale, rising to 32% above 120,000 zł. The flat tax would apply a consistent 19% rate, while the lump-sum tax for her services is 8.5% of revenue.
Beyond income tax rates, health insurance contributions and access to tax reliefs also play a crucial role in determining the most advantageous option. The ability to jointly file taxes with a spouse, or to utilize the tax-free allowance, is exclusive to those using the progressive tax scale. The lump-sum tax requires payment of tax on gross income, precluding the deduction of expenses, which is permitted under the progressive scale and flat tax.
Joanna Łuksza, head of a team of accounting experts at IFIRMA, highlighted the need for a comprehensive calculation, including income, expenses, and social security contributions. She noted the importance of factoring in health insurance contributions, which have been a significant consideration since 2022, stating that focusing solely on the lowest tax rate can be misleading if it results in higher overall public liabilities.
Łuksza also pointed out that additional income sources, such as employment or pensions, and family situations, such as marital status, can influence the optimal tax form. For example, a recent marriage allows for joint tax filing for the entire year, benefiting the progressive scale. Tax reliefs, such as the child tax credit (available only under the progressive scale) and the IP BOX (5% tax) for innovators (available only under the flat tax and progressive scale), must also be considered.
Entrepreneurs earning over 1 million zł annually must also account for the potential solidarity surcharge, which does not apply to those using the lump-sum tax. Łuksza advised individual assessment, noting that a consistent income and business profile may justify remaining with the current tax form, but a thorough review is recommended for those unsure of their optimal choice.
The increasing trend of B2B contracts over traditional employment is driving the popularity of the lump-sum tax, particularly for professions benefiting from preferential rates of 5.5% and 8.5%, significantly lower than rates applicable to employees. This shift has sparked debate, with critics arguing that it creates an unfair advantage, especially given the frozen tax brackets and personal allowance for employees. The government is currently addressing this issue through reforms to the Public Employment Agency (PIP).
