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Linear taxation, lump sum, 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 remain 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, also known as the general rules, is the most popular form of settlement, especially among novice 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 that you do not pay tax on this portion of your 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 account for 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 a record of costs.
The tax scale will be beneficial for those with lower incomes, who benefit from deductions or want to file jointly with their spouse.
Flat tax – stability and predictability.
The flat tax is a constant 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 — always the same rate,
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a favorable option for high-income individuals (over 120,000 PLN per year),
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the possibility of accounting for income-generating expenses.
Disadvantages:
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no possibility of filing jointly with a spouse,
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lack of most deductions, including the family deduction.
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the obligation to keep a record of costs.
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 revenue – 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 advisors 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 a record of revenue is sufficient),
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attractive tax rates for certain sectors.
Disadvantages:
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no possibility of deducting costs,
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no deductions or joint filing,
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sectoral and formal restrictions.
The lump-sum tax is particularly beneficial when you have low business costs, e.g., you work remotely, provide services in person, without significant investments.
Example
Ms. Marta runs a project-based business.
In 2025, she achieved a revenue of 200,000 PLN, and her costs were 40,000 PLN.
In this example, the lowest tax comes from the lump-sum, but only because Ms. Marta has relatively low costs. If she were to buy 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 will be the introduction of a 17% lump-sum for all services provided to a related company — regardless of the nature of the activities performed. This change is still uncertain and many indications suggest that it will 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, among other things, on the level of revenue, 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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