Thanks to the special act, Ukrainian citizens can now perform economic activity in any of the available forms, including sole proprietorship. Its assumption, i.e. registration in the Central Register and Information on Economic Activity (CEIDG) in Poland is free of charge.
This should be borne in mind in the face of occasional attempts to extort additional fees from persons setting up a sole proprietorship by fraudsters operating, in particular, on the Internet. Neither the application for company registration, nor the registration itself are subject to any fees! The situation is different in the case of establishing a business in Poland in the form of a company, e.g. with limited liability, which also involves costs, such as a fee for the application to the court for company registration.
A sole proprietorship can be set up on-line or traditionally at any commune office. Considering that Ukrainian citizens covered by the special act receive a PESEL number and with it access to a trusted profile, it is recommended to choose the online form. A detailed description of the procedure for registering a company in CEIDG by a citizen of Ukraine and practical tips can be found on the website of the portal supervised by the Ministry of Development and Technology at: https://www.biznes.gov.pl/pl/portal/001481.
It is not possible to unequivocally answer the question of what will be the costs of running a sole proprietorship in Poland, including the amount of taxes that will be paid by a given entrepreneur.
As a taxpayer of personal income tax, i.e. PIT, you should choose one of the three forms of taxation of business income:
- on general terms, according to the tax scale (as of May 12, 2022, the tax rate is 17% on income up to PLN 120,000 per year and 32% on income above PLN 120,000 per year)
- at a flat rate (19% tax rate)
- lump sum on recorded revenues.
The tax scale is the basic form of taxation of business income. This means that the entrepreneur will be taxed on general principles, unless he chooses a different form of taxation.
In the case of a tax scale and a flat rate, the subject of taxation is income, and in the case of a lump sum on recorded income, the subject of taxation is the income achieved.
NOTE: in accordance with the government’s draft act amending the act on personal income tax and certain other acts, the PIT tax rate, currently 17%, is to be reduced to 12% from July 1, 2022. The new tax scale is to be applied to income earned from January 1, 2022.
The guide available on the website may help in choosing the optimal form of taxation of business income: https://www.biznes.gov.pl/pl/portal/00172 , which also explains some tax concepts and shows the differences resulting from the choice of the form of taxation.
Apart from taxing income from business activity, one should remember about VAT payable regardless of PIT income tax and whether PIT is accounted for on general principles, according to a flat rate or a lump sum on recorded income.
Entrepreneurs are, in principle, obliged to register for VAT (which can be done already as part of the application for registration of business activity in CEIDG). There are exceptions to this rule. You do not need to register for VAT when:
- sales do not exceed the limit of 200 thousand. PLN per year
- only goods and services exempt from VAT are sold.
Information on the possibility of taking advantage of the VAT exemption is available on the website https://www.biznes.gov.pl/pl/portal/00246.
Another cost related to running a sole proprietorship is the contributions paid to ZUS for:
- social insurance, of which: retirement, disability and accident insurance are obligatory, and sickness insurance is optional
- Labor Fund and Solidarity Fund
- health insurance.
Warning! Persons who are just starting their own business may benefit from the Start Relief for 6 months. The discount exempts you from paying some of the premiums, so only the health insurance premium is paid.
After 6 months, you can take advantage of another option to reduce the contribution and pay the reduced contributions on a preferential basis for 24 months.
The amount of health insurance contribution (i.e. the only one obligatorily paid for the first 6 months of operation) depends on the monthly income earned and currently amounts to 9% of income, but not less than PLN 270.90. The calculator for calculating the health insurance premium is available on the ZUS website at: https://www.zus.pl/firmy/przedsiebiorco-przeczytaj-wazne/kalkulator-skladki-zdrowotnej.
Due to the complexity of the issues of tax and social security law and accounting principles, it is recommended to use accounting services who are tax advisers who will help you choose a favorable form of taxation, and will also keep the company’s accounting books and calculate the amount of tax and social security contributions.