A lump sum on registered income is a simplified form of taxation on business activity. It is a specific form of taxation in which an entrepreneur is not allowed to reduce his income by the tax costs incurred. In a lump sum, tax rates depend on the type of business activity and range from 2% to 17%. If a taxpayer carries out activities from which income is taxed at different rates, the flat rate on registered income is determined according to the rate applicable to income from each type of activity. The condition for this is to keep revenue records in a manner enabling determination of the revenue from each type of activity.
Tax rates
In the case of the registered income lump sum, the tax rate depends on the type of activity performed. Below is an abbreviated list of the types of business activities along with the tax rates.
- 2% – sale of plant and animal products from own cultivation, breeding or rearing, processed in a manner other than industrial,
- 3% – services related to animal production,
- 5.5% – manufacturing activities, construction works or carriage of cargo by means of rolling stock with a capacity exceeding 2 tons,
- 8.5% – services in the field of education other than provided in the liberal professions,
- 8.5% of revenue up to PLN 100 thousand and 12.5% of revenue on the surplus over PLN 100 thousand on account of: services related to accommodation, services of renting and operating of own or leased real estate,
- 10% – services of purchase and sale of real estate on own account,
- 15% – wholesale intermediation, cultural and entertainment services,
- 17% – in case of income earned in liberal professions (including doctors, psychologists, tax advisors).
Lump sum from registered income – Pros and Cons
This method of tax settlement does not allow joint settlement with a spouse. In addition, you will not benefit from preferential tax settlement for single parents. In addition, if your expenses exceed income significantly, you can’t generate tax loss. This solution allows you to conduct simplified accounting, although on the other hand the entrepreneur is obliged to keep records of income and: have and keep proofs of purchase and maintain a list of fixed and intangible assets.
