Whilst Poland isn’t known for being a low tax country, it’s lump sum revenue tax system can work very well for a wide range of location independent businesses, including:
IT developers, product managers, designers and e-commerce store owners.Poland’s 3-15% revenue tax, for up to €2,000,000
Tax rate: Both self-employed individuals and companies with revenues up to €2,000,000 / year can opt-in to pay taxes based on their revenue, as opposed to profit.
The exact revenue tax rate depends on what industry your business falls under; some examples as follows:
- 3% revenue tax for e-commerce store owners (including Amazon FBA, drop-shippers, gumroad and e-book sellers)
- 5%, 8.5% or 12% revenue tax for software developers. This depends on the exact type of work and the way the contracts are structured with your clients, but the vast majority can qualify for 8.5%
- 8.5%-12% revenue tax for product managers
- 8.5%-14% revenue tax for UX, UI and graphic designers
- 15% revenue tax for marketing / business consultants
There are some nuances as to which exact category your business falls under for lump sum tax rate purposes. This can be clarified through obtaining an individual tax ruling where the Polish tax authorities will issue a written confirmation on the applicable tax rate in your exact case, as well as through proper structuring of your business activity (e.g. the specific way your contract is drafted with clients).
Who it works well for: The lump sum tax system works great for businesses with relatively high profit margins, low costs and few employees. What’s nice about Poland’s revenue tax system is the high revenue limits and the fact that it can be applied for self-employed individuals.
Revenue tax systems often apply to companies only, which then requires you to pay a dividend tax on distribution. E.g. a software developer in Poland can simply pay 8.5% on revenue and have the funds in his personal account, whilst a software developer in Romania would pay 3% revenue tax, but a further 5% dividend tax when he withdraws money from his company to this personal account.
Social / health insurance: You will pay a fixed social / health insurance tax of around 1000 PLN / month, regardless of what you earn. However you can skip social / health insurance payments, by suspending your business activity at any time (e.g. for 2 months when you are on holiday with no revenue).
At the time of writing, there is also an alternative tax regime where you will pay an 8.5% tax rate on profit, with the ability to deduct expenses and pay no social insurance. However there is a limit of 85,528 PLN per year. The set-up cost is low and this option works very well for those just starting out, or those who would like to try out Poland before establishing a business activity or limited liability company. Feel free to reach out if you want to learn more.
VAT: In general, no VAT is charged if you do not sell to Polish customers. If you sell to Polish customers, the VAT rate is 23%.
Entry requirements: EU citizens can enter and work in Poland without any restrictions. It is moderately easy for citizens from non-EU countries to obtain a work visa in Poland.
Warsaw's old town: