Choosing the right form of taxation is one of the most important decisions a person starting a business has to make. It determines not only how much tax you pay, but also your administrative obligations and whether you can use tax reliefs. In 2026, business owners in Poland can choose from several forms of taxation, each with different rates, rules for calculating tax and record-keeping requirements.
When you register your business on the CEIDG-1 form (the application to CEIDG, the Central Register and Information on Economic Activity), you must state your chosen form of taxation. If you already run a business, you can change the form of taxation for a new tax year by filing a statement with the head of the tax office (urząd skarbowy) or by updating your entry in CEIDG (Article 9a(2c) of the PIT Act, Article 9(1c) of the Act on flat-rate income tax). Before you decide, analyse your expected revenue, costs and the nature of your business carefully.
You must choose the flat tax or the flat-rate tax on recorded revenue by the 20th of the month following the month in which you earned your first business revenue in the tax year (or by the end of the year if your first revenue falls in December) — Article 9a(2) of the PIT Act and Article 9(1) of the Act on flat-rate income tax. If you are switching from the tax card (karta podatkowa), the deadline is 20 January of the tax year (Article 29(1) of the Act on flat-rate income tax)
Forms of taxation available for a business in 2026
Polish tax law provides four basic forms of taxation for business activity carried on by individuals. Each has different rules for calculating tax, different rates and specific record-keeping requirements.
The basic and most frequently chosen form is the tax scale (12% and 32%), also called the general rules (zasady ogólne). It applies not only to business income, but also to income from employment, civil-law contracts and benefits from ZUS (Social Insurance Institution), such as allowances, disability pensions and retirement pensions.
The second popular option is the flat 19% tax (podatek liniowy), an attractive alternative for business owners with higher income. It has one fixed income tax rate regardless of how much you earn, which makes it particularly beneficial for higher earners.
The flat tax has a fixed rate of 19% regardless of your income. Business owners who choose it can also deduct the health insurance contribution they have paid from their income (or include it in costs), up to a limit of PLN 14,100 in 2026
Business owners can also use lump-sum forms of taxation: the tax card (karta podatkowa) and the flat-rate tax on recorded revenue (ryczałt). These forms have simplified settlement rules and fewer administrative obligations.
When choosing a form of taxation, consider not only the financial aspects, but also the type of business. Some forms are available only for certain types of activity or for business owners who do not exceed specific revenue limits.
The tax scale: general rules of taxation
The tax scale is the most universal form of taxation, available to all business owners regardless of the type of activity. Income is taxed on a two-step progressive scale, which means the tax rate rises as your income rises.
Under the tax scale, the tax base is income, calculated as business revenue minus tax-deductible costs. This lets you reduce your tax base by all costs of running the business, provided they are economically justified and documented.
Under the table in force since 2022 (Article 27(1) of the PIT Act, unchanged in 2026), the tax scale is as follows: for income up to PLN 120,000 the rate is 12% minus the tax-reducing amount of PLN 3,600. For income above PLN 120,000, the tax is PLN 10,800 plus 32% of the excess over PLN 120,000.
The tax-free amount under the tax scale is PLN 30,000 a year. This means that business owners whose income does not exceed this amount pay no income tax, which is a significant relief for those just starting out
How to choose the tax scale
You can choose the tax scale when you register your business on the CEIDG-1 form. This is the most convenient moment, because no further formalities are needed later.
Business owners who have so far used another form of taxation, such as the flat tax or ryczałt, can switch to the general rules. You must file a notification that you are giving up the flat tax or ryczałt by the 20th of the month following the month in which you earned your first revenue in the new tax year (Article 9a(2b) of the PIT Act, Article 9(1b) of the Act on flat-rate income tax).
If you are switching from the tax card, the deadline is shorter: 20 January of the tax year (Article 29(1) of the Act on flat-rate income tax). The notification is filed in writing with the head of the tax office or through CEIDG (the CEIDG-1 application).
Business owners taxed under the tax scale who do not want to change their form of taxation do not have to notify the head of the tax office. Not filing any statement on the form of taxation means you continue with the current form
Periodic and annual settlements under the tax scale
Business owners taxed under the tax scale must pay advance income tax payments monthly or quarterly. Which option you can use depends on your revenue and status.
Quarterly settlement is available only to small taxpayers, that is business owners whose revenue from sales (including VAT) in the previous tax year did not exceed EUR 2,000,000 (Article 5a(20) of the PIT Act). Converted into Polish złoty, the limit is PLN 8,517,000 in 2026 and PLN 8,754,000 from 1 January 2027. Business owners starting a business can also use quarterly settlement.
You must calculate the advance payments and pay them into the individual tax micro-account of the relevant tax office by the 20th of the month following the settlement period. If that date falls on a non-working day, pay on the next working day.
- Calculate your income for the settlement period
- Apply the correct tax rate under the scale
- Deduct the tax-reducing amount
- Take into account advance payments made in previous periods
- Pay the difference into the tax micro-account
After the end of the tax year, business owners taxed under the tax scale file the annual PIT-36 return (the annual personal income tax return) with the tax office. The deadline is 30 April of the year following the tax year.
Advantages and disadvantages of the tax scale
The tax scale has many advantages, but also some limitations that you should consider when choosing your form of taxation.
| Advantages of the tax scale | Disadvantages of the tax scale |
|---|---|
| Right to tax reliefs | Progressive tax rate |
| Joint filing with a spouse | Obligation to keep a KPiR |
| Filing as a single parent | More formalities |
| Tax-reducing amount (PLN 3,600) | No deduction of the health contribution |
The main advantages of the tax scale include the right to use tax reliefs, which can significantly reduce your tax burden. You can also file jointly with your spouse and file as a single parent, which in many cases lowers the tax.
The tax-free amount of PLN 30,000 and the ability to deduct tax-deductible costs are significant benefits for business owners who are starting out or earn lower income
The main disadvantage of the tax scale is the progressive rates: once your income exceeds PLN 120,000, you pay tax at 32%. You must also keep a KPiR (tax revenue and expense ledger) and deal with more formalities related to business records. You can hand the KPiR over to our accounting firm in Warsaw.
The flat tax: a fixed 19% rate
The flat tax is an attractive alternative for business owners with higher business income. It has a fixed tax rate of 19% regardless of your income, which makes it particularly beneficial for higher earners.
As with the tax scale, the tax base under the flat tax is income, calculated as business revenue minus tax-deductible costs. You can therefore reduce your tax base by all economically justified and documented business costs.
An important advantage of the flat tax is the ability to deduct the health insurance contribution from income (or include it in costs) up to a limit of PLN 14,100 in 2026 (Article 30c(2)(2) of the PIT Act). This option is not available to business owners taxed under the tax scale, which is an additional financial benefit.
The flat tax is not combined with income from other sources taxed under the tax scale. This means that your business income does not push up the tax rate on other income, such as salaries or benefits
Choosing the flat tax
You can choose the flat tax when registering your business on the CEIDG-1 form. This is the most convenient moment, because no further procedures are needed later.
Business owners who have used other forms of taxation so far can switch to the flat tax. You must notify the change by the 20th of the month following the month in which you earned your first revenue in the tax year (Article 9a(2) of the PIT Act). If you are switching from the tax card, the deadline is 20 January.
The statement is filed in writing with the head of the tax office or through CEIDG (the CEIDG-1 application). Business owners who do not want to change their form of taxation do not have to notify the head of the tax office.
Settlements under the flat tax
Business owners on the flat tax pay advance income tax monthly or quarterly. Quarterly settlement is available to small taxpayers whose revenue from sales (including VAT) in the previous tax year did not exceed EUR 2,000,000 (PLN 8,517,000 in 2026, PLN 8,754,000 from 1 January 2027) and to business owners starting a business.
You must calculate the advance payments and pay them into the individual tax micro-account of the relevant tax office by the 20th of the month following the settlement period. If that day is a non-working day, pay on the next working day.
After the end of the tax year, business owners on the flat tax file the annual PIT-36L return with the tax office. The return must be filed by 30 April of the following year.
Business owners on the flat tax do not file monthly or quarterly tax returns. It is enough to calculate and pay the advance payment on time and file the annual return
Advantages and limitations of the flat tax
The flat tax has many advantages, but also some limitations that you should consider when choosing this form of taxation.
The main advantages of the flat tax include:
- A fixed tax rate regardless of income
- No effect on the tax rate applied to other income
- An easier way to calculate tax
- The ability to deduct the health contribution
- The ability to reduce revenue by tax-deductible costs
The main limitations of the flat tax include:
- No right to most tax reliefs
- No joint filing with a spouse
- No right to file as a single parent
- No tax-free amount
A business owner running a consultancy earned income of PLN 200,000 in 2026. Under the tax scale, the tax would be PLN 36,400, while under the flat tax it would be PLN 38,000. However, the health contribution must be added: 9% of income under the tax scale (PLN 18,000) and 4.9% of income under the flat tax (PLN 9,800), which under the flat tax can also be deducted from income up to the PLN 14,100 limit — overall, the flat tax turns out to be cheaper in this example (a simplified example, without social insurance contributions).
Flat-rate tax on recorded revenue (ryczałt)
The flat-rate tax on recorded revenue (ryczałt) is a specific form of taxation in which you cannot reduce your revenue by the costs you incur. In return, ryczałt rates are relatively low, ranging from 2% to 17% depending on the type of business.
The ryczałt rates differ depending on the nature of the activity and are: 2%, 3%, 5.5%, 8.5%, 10%, 12%, 12.5%, 14%, 15% and 17% (Article 12(1) of the Act on flat-rate income tax). The lowest rates (2% and 3%) apply, among others, to sales of processed products from your own crops or livestock and to trade and catering (excluding alcohol above 1.5%), 5.5% to manufacturing and construction work, while the highest rates apply to the liberal professions (17%) and some intellectual services, for example advisory, legal or advertising services (15%), and medical, architectural and engineering services (14%).
Ryczałt is available only to business owners whose revenue in the year before the tax year did not exceed the equivalent of EUR 2,000,000 (Article 6(4)(1)), which in 2026 is PLN 8,517,200 (euro rate of 1 October 2025, Article 4(2)), and from 1 January 2027 PLN 8,754,000
Conditions for using ryczałt
Ryczałt can be used by individuals earning revenue from non-agricultural business activity, including civil partnerships of individuals (spółka cywilna) and general partnerships of individuals (spółka jawna). The condition is that revenue in the year before the tax year did not exceed EUR 2,000,000.
This form of taxation is also available, regardless of revenue, to people who start a business in the given tax year and do not use the tax card. This makes things much easier for new business owners.
The Act on flat-rate income tax contains a list of activities whose revenue can never be taxed under ryczałt. These exclusions cover, among others, running pharmacies, buying and selling foreign currency, trading in motor vehicle parts and accessories, and manufacturing excise goods (Article 8(1)); you also lose the right to ryczałt if, among other things, you provide services to your former or current employer that correspond to the work you did as an employee (Article 8(2)).
How to choose ryczałt
You can choose ryczałt when registering your business on the CEIDG-1 form. Business owners who have used other forms of taxation so far can switch to ryczałt by filing a statement with the head of the tax office or through CEIDG (the CEIDG-1 application) — Article 9(1) and (1c).
You must notify the switch to ryczałt by the 20th of the month following the month in which you earned your first revenue in the tax year. If you are switching from the tax card, the deadline is 20 January.
Business owners taxed under ryczałt who want to stay on it in the next tax year do not have to notify the tax office. If you do not report a change, you continue with ryczałt
Settlements under ryczałt
Business owners taxed under ryczałt pay the tax monthly or quarterly. With monthly settlement, you calculate the payment and pay it into the tax office account by the 20th of the month for the previous month.
Quarterly settlement is available only to business owners starting a business and to those whose revenue from activity carried on alone, or the partnership’s revenue, did not exceed the equivalent of EUR 200,000 in the year before the tax year (Article 21(1b)). In 2026 the limit is PLN 851,720, and from 1 January 2027 PLN 875,400. The quarterly payment is due by the 20th of the month following the quarter.
After the end of the tax year, business owners on ryczałt file the annual PIT-28 return with the tax office. The return must be filed between 15 February and 30 April of the following year.
Record-keeping obligations under ryczałt
Taxpayers on ryczałt have simpler record-keeping obligations than business owners using other forms of taxation. The basic obligation is to keep a revenue record (ewidencja przychodów).
In addition, business owners must:
- Hold and keep purchase documents for goods and services
- Keep a register of fixed assets and intangible assets
- Prepare a list of business assets when closing the business and when converting into a single-member capital company (Article 21(6)–(7))
- Document all revenue from the business
Business owners taxed under ryczałt do not keep a KPiR, which greatly simplifies administrative obligations. It is enough to keep a revenue record and retain the relevant documents
The tax card: a lump-sum form of taxation
The tax card (karta podatkowa) is the most simplified form of taxing business activity, with a fixed amount of tax that does not depend on revenue. The tax under the tax card does not reflect the business owner’s actual revenue in any way, which makes it particularly attractive for people earning higher revenue from an activity covered by the card.
The tax card rate depends on several factors, such as the type of services, the number of employees, the size of the town where the business is carried on and the scale of the business. These criteria allow the tax burden to vary according to the nature and scale of the activity.
The tax card is available only to taxpayers carrying on the type of activity listed in Article 23(1) of the Act on flat-rate income tax. This means that not every business owner can use this form of taxation.
As part of the Polish Deal (Polski Ład) reform, the tax card was abolished from 2022 for taxpayers starting a business and for those wishing to change their form of taxation. Only business owners who paid it on 31 December 2021 and have not given it up or lost the right to it since then can stay on the tax card (Article 25(1)(1) of the Act on flat-rate income tax)
How the tax card is applied
Business owners who used the tax card and did not choose another form of taxation by 20 January automatically remain on it in the next tax year. Not reporting a change is treated as a wish to continue with the tax card.
Switching to the tax card from another form of taxation (an application on the PIT-16 form) has not been possible since 2022 — only a taxpayer who has continued it without interruption since 31 December 2021 can use it (Article 25(1)(1)).
Business owners can waive the tax card within 14 days of receiving the decision setting the amount of income tax (Article 32(1)). From the first day of the following month, they then pay ryczałt or tax under the general rules (Article 32(2)); outside this procedure, giving up the tax card is reported by 20 January of the next tax year.
Obligations under the tax card
Business owners taxed under the tax card have much simpler administrative obligations than under other forms of taxation. They do not have to keep a KPiR, which is a significant simplification.
The basic obligations of business owners on the tax card are:
- Issuing bills and invoices at the customer’s request
- Keeping employment records if they employ staff
- Settling advance tax payments and ZUS contributions on employees’ pay
- Paying the tax card tax, reduced by 19% of the health contribution paid, by the 7th of the following month (Article 31(1) and (3))
- Filing the annual PIT-16A return on the health contribution by the end of February of the following year (Article 31(2))
The tax card payment for December must be made by 28 December of that year, which is an exception to the standard payment deadline of the 7th of the following month
Business owners on the tax card must also inform the tax office of any changes, such as changes in the number of employees, and prepare a list of business assets when closing the business.
Advantages and limitations of the tax card
The tax card has some advantages, but also significant limitations that you should consider when assessing this form of taxation.
| Advantages of the tax card | Limitations of the tax card |
|---|---|
| Low and fixed amount of tax | No deduction of costs |
| No obligation to keep a KPiR | Limited availability |
| Payment independent of revenue | Not available to new business owners |
| Simplified administrative obligations | Risk of losing profitability when revenue is low |
The main advantage of the tax card is the low and uniform amount of tax paid periodically, which does not depend on revenue. Business owners pay a fixed amount whether their revenue is high or low.
A hairdresser in a small town pays a tax card amount of PLN 250 a month (an example amount — the rate is set by the head of the tax office in a decision). Whether they serve 50 or 150 customers a month, the tax stays the same, which makes it easy to plan business costs.
How to choose the best form of taxation
Choosing the best form of taxation for your business requires a detailed analysis of many factors that affect your final tax burden and administrative obligations. Before you decide, analyse your expected revenue, costs and the nature of your business carefully.
The basic criterion is your estimated revenue and costs. Business owners with lower income often benefit more from the tax scale because of the tax-free amount and the ability to use tax reliefs. Business owners with higher income may prefer the flat tax because of its fixed rate.
The type of business activity is also important. Some forms of taxation are available only for certain types of activity, which limits your choice. A business with high costs can benefit from forms of taxation that allow those costs to be deducted.
Business owners who are married and have children should particularly consider the tax scale, because of joint filing with a spouse and the tax reliefs for raising children
Analysing the profitability of each form
To analyse the profitability of each form of taxation, compare the expected tax burden under each available option. The analysis should take into account not only income tax, but also health contributions and other mandatory charges. In 2026, the health contribution is 9% of income under the tax scale and 4.9% of income under the flat tax — in both cases no less than PLN 432.54 a month (from February 2026) — while under ryczałt it is PLN 498.35, PLN 830.58 or PLN 1,495.04 a month, depending on annual revenue (up to PLN 60,000, up to PLN 300,000, above PLN 300,000).
For a business with low costs and high revenue, ryczałt may be beneficial, especially at low ryczałt rates. For a business with high costs, forms that allow costs to be deducted will be more cost-effective.
Business owners should also take into account the administrative obligations of each form of taxation. Keeping a KPiR requires more work than keeping a simple revenue record under ryczałt.
Changing your form of taxation
Polish tax law allows you to change your form of taxation for each new tax year, so you can adapt how you settle tax to changing business conditions. However, the change must be reported on time.
The deadline for reporting a change in the form of taxation is the 20th of the month following the month in which you earned your first revenue in the tax year. If you are switching from the tax card, the deadline is shorter: 20 January.
A change in the form of taxation is reported in writing to the head of the tax office or through CEIDG (the CEIDG-1 application). Business owners who do not want to make a change do not need to do anything
Business owners should regularly review whether their chosen form of taxation is still cost-effective, especially if the nature or scale of the business changes significantly. Growing income may justify switching from the tax scale to the flat tax, while falling costs may encourage you to consider ryczałt. It is also worth keeping an eye on new tax limits, as they decide whether a given form still pays off.
