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Linear tax, flat rate, or maybe a tax scale? What form of taxation should you choose for your business?
Choosing a form of taxation is one of the most important decisions when starting a business. It determines what portion of your income will be left at your disposal after paying taxes and contributions. Polish law offers entrepreneurs several options, each with different rules, limits, and financial consequences.
Tax scale – flexibility and deductions.
The tax scale, or the so-called general rules, is the most popular form of settlement, especially among beginner entrepreneurs.
The tax is calculated on income (i.e., revenue minus costs), and the rates are:
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12% for income up to 120,000 PLN per year,
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32% on the excess above 120,000 PLN.
Additionally, there is a tax-free amount of 30,000 PLN, which means you do not pay tax on that part of the income.
Advantages:
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you can take advantage of tax deductions (for children, internet, donations, etc.),
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you can file jointly with your spouse,
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you can include all business expenses.
Disadvantages:
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with high incomes, you may enter the 32% bracket,
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a large number of formalities and the obligation to keep cost records.
The tax scale will be beneficial for those with lower incomes, who take advantage of deductions, or who want to file jointly with their spouse.
Flat tax – stability and predictability.
The flat tax is a fixed rate of 19% on income, regardless of its amount. There are no brackets or tax-free amounts.
Advantages:
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simplified settlement,
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predictability – the same rate every time,
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a favorable option for high-income individuals (over 120,000 PLN per year),
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the possibility of including costs of obtaining income.
Disadvantages:
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no option to file jointly with a spouse,
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lack of most deductions, including the family deduction.
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the obligation to keep cost records.
For entrepreneurs with stable and high revenues (e.g., IT specialists, advisors, consultants), the flat tax is often the simplest and most profitable solution.
Lump-sum tax on recorded revenues – simplicity, but without costs.
The lump-sum tax is calculated on revenue, without considering costs. You do not calculate income – you pay a percentage on everything you earn.
The rates depend on the type of business and are as follows:
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8.5% – for most services,
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12% – for the IT and new technologies sector,
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15% – for consultants and agencies,
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17% – for legal professions.
Advantages:
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very simple settlement rules,
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limited administrative obligations (just revenue records),
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attractive tax rates for some industries.
Disadvantages:
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no option to deduct costs,
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no deductions and joint filing,
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industry and formal restrictions.
The lump-sum tax is particularly worthwhile when you have low business costs, e.g., you work remotely, provide services in person, without large investments.
Example
Ms. Marta runs a project business.
In 2025, she achieved revenue of 200,000 PLN, and her costs were 40,000 PLN.
In this example, the lowest tax is provided by the lump-sum tax, but only because Ms. Marta has relatively low costs. If she were to purchase equipment and incur higher expenses, the lump-sum would no longer be beneficial.
Changes from 2026
The government announced adjustments to lump-sum rates for certain professions (including advisors, marketing agencies, and the IT sector) and simplification of the rules for changing the form of taxation during the year.
The most significant change for many entrepreneurs is expected to be the introduction of a 17% lump-sum for all services provided to a company related to the entrepreneur, regardless of the nature of the activities performed. This change is still uncertain and many indications suggest that it may not come into effect on January 1, 2026.
The flat tax and scale will remain unchanged.
Summary
There is no one universal form of taxation that will be suitable for everyone. The choice depends on factors such as the level of income, the level of costs, the type of business, and the model of cooperation with contractors.
At Finestro, we explain the various forms of taxation so that even complex regulations become understandable and applicable in daily business.
We will help you navigate all formal stages – from registration to maintaining current records and settlements.
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