Taxes For JDG In Poland
Entrepreneurs in Poland can pay the following taxes:
– Personal Income Tax (PIT) – income tax. It is paid by everyone.
– Value-added tax (VAT) – value-added tax (VAT). It is paid only in certain situations.
A business person can choose one of three ways to calculate PIT:
general tax (Tax Scale) – it will be beneficial for those who earn no more than 120 thousand zlotys/year ($27700). If your income is between PLN 30k and 120k, you will be taxed at a rate of 12% on the amount higher than PLN 30k. Income up to PLN 30 thousand is not taxed in this case.
Example:
If you earn PLN 70,000, you should pay (70 – 30)*0.12 = PLN 4800.
All earnings above PLN 120,000 are taxed at a rate of 32%. This system is not suitable for people with high earnings.
A big plus in this option is the ability to exclude business-related expenses from taxable income. For example, such as furniture, equipment purchases, communications, transportation and basically anything that can be counted as a business expense.
Another important point is that you can file a tax return jointly with your spouse. If he/she has no income, the taxable income is reduced by 30 thousand zlotys, and the 32 percent income tax rate is higher than 240 thousand zlotys.
Flat tax (Lump sum) – in this case you must pay a lump sum on your income. With this option, you cannot file a tax return jointly with your spouse and exclude expenses from your taxable income. This is the most common option chosen by it professionals who have moved on a PBH visa.
The tax rate in this case depends on the type of business. You need to look through the registry, find yours and specify the type of business when registering your IP.
For programmers, the appropriate code is: 62.01Z, the rate for this type of activity is 12%. Designers, product managers and other specialists will have a different type of business and tax rate.
If you have an idea to choose a similar activity, but with a lower tax rate, you’d better push the idea away. There is a high risk that the tax authorities will audit the activity and you will pay the difference anyway, but you will also receive a hefty fine. Important: you can show several activities with different rates on one invoice.
Proportional tax (Flat tax) – assumes 19% on all income, but allows you to reduce the tax base by the amount of business expenses. If there are deductible expenses, this solution can be advantageous. However, it is not possible to file jointly with a spouse.
There are two types of value added tax, both subject to a 23% rate:
Intra-Polish VAT, which must be paid in three cases:
– If your taxable income exceeds PLN 200,000 per year.
If you earn income from certain activities that are subject to a zero VAT rate. A list of these activities can be found here.
– If you need to write off VAT on business-related purchases. For example, if you buy 10 laptops every month, you can get a 23% refund on the price.
European VAT (VAT-EU).
This is applied when dealing with customers from other EU countries. The service provider does not have to pay VAT, this tax can be paid by the customer in his country. However, it is still necessary to file a VAT-EU return.
Fixed tax is the most popular option among IT professionals, as they often need to buy equipment for their work, and their income exceeds Zl 120,000 per year.
For IT professionals, Digital and freelancers, there is a solution to optimize their business and operate legally in Poland. Such a solution is a business incubator. Here you can pay a tax rate of 6-9.6% instead of 12-32%.
This is a great solution for anyone looking to operate a business within the law and under more favorable conditions. Join Freedom Business Area and realize your ideas easily, confidently and profitably.