When filling in the CEIDIG-1 form, you must choose the appropriate form of taxation when establishing your business. You can choose: general taxation (17% and 32%), flat rate (19%), lump sum of registered income and tax card. If you decide on a taxation method such as: flat rate, lump sum or tax card, you must submit an appropriate letter to the appropriate head of the tax office. The form you choose is valid for the whole year. If during your current business activity it turns out that a different taxation method is more beneficial for your company, you can change it. The change must be made at the beginning of the tax year, no later than January 20. Read the article to the end and find out more about the forms of taxation on business activity in Poland.
General rules – 17% and 32%
General rules are the most frequently chosen form of taxation. The tax is calculated on income, i.e., on the surplus of the sum of income over the sum of costs. In this case the threshold that determines the tax rate is the annual amount of earnings, which is PLN 85 528 per year. The thresholds are as follows:
- 17% up to PLN 85 528 of income
- 32% above 85 528 PLN
In case of using this form of taxation, an entrepreneur is obliged to keep a revenue and expense ledger where he records his income and expenses. In addition, at the end of the tax year, a physical inventory must be made, showing materials and goods purchased.
Read more about Taxation according to general rules
Forms of business taxation – General rules – 19% flat tax
In case of choosing this option, the entrepreneur pays a flat tax rate of 19% regardless of the income earned. The disadvantages of this option include lack of possibility to take advantage of most of tax reliefs and lack of possibility to settle accounts with a spouse.
Forms of business taxation – lump sum
Lump sum tax is a specific form of taxation. In this case the entrepreneur is not allowed to reduce his income by the tax costs incurred. On the other hand, it has the advantage of relatively low flat rates – 2%, 3%, 5.5%, 8.5%, 10%, 12.5%, 15% and 17%. They depend on the type of business activity.
Forms of Business Taxation – Tax Card
Tax card is a lump-sum form of taxation. The tax paid does not in any way reflect the income earned. This solution is intended for persons who carry out activities defined in Article 23(1) of the Lump Sum Income Tax Act (e.g. care for children and the sick, entertainment services).
