How much tax do I have to pay on my own business?

Any individual who decides to set up their own business is obliged to pay income tax. However, the answer to the question ‘how much tax do I have to pay on my own business?’ depends on the chosen tax regime, as well as the specific type of business activity carried out. We invite you to read on!

What tax does a sole trader pay in 2024? The tax scale

Let’s start with the basic form of taxation on business income, which is also the default option. This means that you will be taxed under this system even if you do not select a specific method of taxation when registering your business.

The tax scale – as this is the type of taxation in question – has two tax rates:

• 12% for income up to PLN 120,000;
• 32 per cent on income in excess of this amount.

It is important to note that when calculating tax using the tax scale, you are also entitled to deduct the tax-reducing amount, which is derived from the tax-free allowance.

In 2024, the tax-free allowance amounts to 30,000 zł, which means that the tax-reducing amount is exactly 3,600 zł (30,000 zł × 12 per cent). In practice, this results in a business tax liability of:

• 12 per cent on income up to PLN 120,000 minus PLN 3,600;
• PLN 10,800 ((PLN 120,000 × 0.12) – PLN 3,600) plus 32% on the portion of income exceeding PLN 120,000.

Income tax for sole traders subject to a flat-rate tax

Another form of taxation, particularly popular amongst higher-income business owners, is the flat-rate tax.

Opting for this form of taxation means a business tax rate of 19 per cent on income, regardless of the amount.

Tax for sole traders in 2024: a flat-rate tax on recorded income.

What is the tax rate for a business operating under the flat-rate scheme on recorded revenue?

The flat-rate tax rate may vary, as it depends on the type of business activity carried out. However, it ranges from 2% to 17%.

Below are examples of tax rates for certain types of business activity:

• 17 per cent: liberal professions;
• 15 per cent: services relating to advertising, market research and public opinion polling, and the sale of advertising space in directories and lists; services in the fields of sport, culture, entertainment and recreation; services involving the storage and warehousing of liquids and gases; services involving the storage and warehousing of goods in free zones; wholesale agency services; agency services for the sale of motorbikes, their parts and accessories; reproduction of computer storage media;
• 14%: healthcare services, architectural and engineering services, technical testing and analysis, specialist design services;
• 12%: consultancy services relating to computer hardware or software; services involving the publication of computer game packages or software;
• 10%: services relating to the purchase and sale of property on one’s own account;
• 8.5% up to PLN 100,000 and 12.5% on the amount exceeding this: revenue from lettings, sublettings and sub-leases, accommodation services, research and development, the hire and leasing of various types of vehicles (cars, motorbikes, watercraft and aircraft), as well as containers, caravans, intellectual property and similar products;
• 8.5 per cent: educational services, services relating to the operation of libraries, museums and archives, services relating to firefighting and fire prevention, the manufacture of items from materials supplied by the contracting authority, and service activities;
• 5.5%: manufacturing activities, construction works, commercial activities involving the sale of public transport tickets, postage stamps, tokens and cards for vending machines, and the sale for consideration of certificates of origin received from entities engaged in the generation of energy from renewable sources;
• 3 per cent: catering activities (excluding revenue from the sale of alcoholic beverages with an alcohol content exceeding 1.5 per cent), certain commercial service activities, and services related to animal production.

It is worth noting, however, that in the case of a flat-rate scheme, tax is paid not on income but on turnover. This is a significant difference, which means that tax-deductible costs cannot be taken into account.

Are you worried about the tax implications of running your own business?

We know full well that the costs associated with running your own business can be overwhelming. We’re not just talking about the taxes described above, but also other costs, such as social security contributions or bookkeeping services.

If you do not want to shoulder all the costs, as well as the other responsibilities and paperwork involved in running your own business, but still have your own business dreams, you might be interested in the solution offered by the business incubator run by the ‘Firma Dla Każdego’ Foundation!

It is Poland’s highest-rated organisation supporting entrepreneurship by providing opportunities to run your own business without the need to register it.

You can find details of our offer on the website: https://firmadlakazdego.pl/.

Sources:

• https://biznes.gov.pl/pl/portal/00172
• https://www.biznes.gov.pl/pl/portal/00264
• https://www.biznes.gov.pl/pl/portal/00253
• https://www.biznes.gov.pl/pl/portal/00263
• https://poradnikprzedsiebiorcy.pl/-jakie-podatki-placi-przedsiebiorca
• https://poradnikprzedsiebiorcy.pl/-dzialalnosc-gospodarcza-cz-3-rozliczenia-z-urzedem-skarbowym-podatek-dochodowy-cz-i
• https://poradnikprzedsiebiorcy.pl/-podatek-liniowy-w-dzialalnosci-gospodarczej-czy-to-sie-oplaca
• https://firmadlakazdego.pl/jaka-forma-opodatkowania-dla-firmy-jednoosobowej/
• https://firmadlakazdego.pl/koszty-firmy-jednoosobowej-w-2023-roku-jak-wysokie-beda/
• https://firmadlakazdego.pl/wysokosc-skladek-zus-dla-prowadzacych-dzialalnosc-gospodarcza/
• https://firmadlakazdego.pl/czym-jest-inkubator-przedsiebiorczosci/
• https://firmadlakazdego.pl/prowadzenie-dzialalnosci-gospodarczej-bez-rejestracji/
• https://firmadlakazdego.pl/