Small taxpayer (mały podatnik) status in PIT (personal income tax) is an important part of the Polish tax system and directly affects how entrepreneurs run their businesses. The EUR 2,000,000 threshold itself does not change, but its value in złoty is set anew every year – in 2026 it is PLN 8,517,000, and from 1 January 2027 it will be PLN 8,754,000.
Because the limit depends on the euro exchange rate, in some years it is lower in złoty and in others higher – in 2026 it is lower than in 2025 (PLN 8,569,000), and in 2027 it will be higher. It is crucial to understand how limits expressed in euro are converted into złoty and how they are applied in practice.
Definition of a small taxpayer in PIT in 2026
Under Article 5a(20) of the PIT Act, a small taxpayer is a taxpayer whose sales revenue (including output VAT) in the previous tax year did not exceed a certain threshold. The threshold is EUR 2,000,000 converted into złoty.
The limit defining small taxpayers for income tax purposes is expressed in euro, so its value in złoty depends on the average euro exchange rate on the first working day of October of the previous tax year. This means that the amount in złoty may change with exchange rate fluctuations
An important element of the definition is how sales revenue is calculated. For active VAT payers, output VAT must be added to sales revenue. This rule is fundamental for correctly determining whether a business fits within the small taxpayer limit.
Pay particular attention to the situation of an enterprise in probate (przedsiębiorstwo w spadku). In that case, the sales revenue earned by the deceased entrepreneur must also be taken into account when assessing the limit. This means that, when assessing the small taxpayer criteria, the enterprise in probate adds its own sales revenue to the deceased entrepreneur's revenue from the previous year.
When determining small taxpayer status, an enterprise in probate must take into account its own sales revenue and the sales revenue of the deceased entrepreneur. Revenue that the heirs earn from their own, separate business is not added
How the limit is converted into złoty
The conversion of the EUR 2,000,000 limit into złoty follows strictly defined rules. The key element is the average exchange rate published by the National Bank of Poland (NBP) on the first working day of October of the previous tax year. For 2026, the rate from the first working day of October 2025 applies.
The average NBP euro rate on 1 October 2025 (table 190/A/NBP/2025) was PLN 4.2586 per EUR 1. Using this rate, you can calculate the exact value of the limit in złoty:
EUR 2,000,000 × PLN 4.2586/EUR = PLN 8,517,200
The value obtained after converting euro into złoty must also be rounded to the nearest thousand in accordance with Article 5a(20) of the PIT Act
After rounding to the nearest thousand, the small taxpayer limit in PIT in 2026 is PLN 8,517,000. This is the threshold that, if not exceeded in the previous tax year (2025), entitles you to small taxpayer status in 2026. For 2027 the limit is PLN 8,754,000 (rate of 4.3770 on 1 October 2026), and sales revenue from 2026 is compared with it.
Because the limit is converted at the euro rate from October of the previous year, entrepreneurs can know in advance what limit will apply in the next tax year.
Rules for determining sales revenue
Correctly determining sales revenue is a key part of verifying small taxpayer status. What counts is the value of sales of goods, products and services within the business, regardless of the form of payment.
For taxpayers running a business, sales revenue includes:
- Revenue from the sale of goods and services
- Revenue from manufacturing activity
- Revenue from service activity
- Revenue from trading activity
- Output VAT on these sales (for active VAT payers)
Active VAT payers must add output VAT to their sales revenue. This means that the small taxpayer limit is assessed on gross revenue including VAT, not net revenue
Pay particular attention to when revenue is recognised. Both with the KPiR (tax revenue and expense ledger) and with accounting books, business revenue arises as a rule on the day goods are delivered or a service is performed, but no later than the day the invoice is issued or the receivable is paid (Article 14(1c) of the PIT Act), regardless of the payment deadline. The exception is the cash method (Article 14c), which can be chosen by entrepreneurs running a business on their own who do not keep accounting books and whose revenue in the previous year was up to PLN 2,000,000 (the limit applying from 2026).
Revenue received in different forms also matters. Sales revenue is a narrower concept than business revenue – it covers sales of goods, products and services, not, for example, debt write-offs or benefits received free of charge, even though these are business revenue.
Benefits of small taxpayer status
Small taxpayer status in PIT comes with a few specific rights designed to make running a business easier for smaller entities. The main benefits are quarterly advance payments and one-off depreciation of fixed assets.
The right to keep a KPiR instead of full accounting books does not result from small taxpayer status, but from a separate threshold: net revenue for the previous year below EUR 2,500,000 (Article 2(1)(2) of the Accounting Act; PLN 10,646,500 in 2026). This form of record-keeping is much simpler and requires less time and money for bookkeeping.
- Option to pay quarterly PIT advances (Article 44(3g)–(3h) of the PIT Act)
- One-off depreciation of fixed assets up to EUR 50,000 a year (Article 22k(7))
- Quarterly VAT returns (JPK_V7K) – for a small VAT taxpayer (Article 99(2)–(3) of the VAT Act)
- Cash accounting in VAT – the tax point arises when payment is received (Article 21 of the VAT Act). Eligibility depends on the thresholds we discuss when looking at who gains and who loses under the new limits.
- The same EUR 2,000,000 threshold in the definition of a small VAT taxpayer (Article 2(25) of the VAT Act)
Small taxpayers also have special rights regarding fixed asset depreciation. They can make a one-off depreciation write-off for fixed assets newly entered in the register from groups 3–8 of the Classification (excluding passenger cars) up to EUR 50,000 a year – PLN 213,000 in 2026 and PLN 219,000 from 1 January 2027. This is de minimis aid (Article 22k(7), (10) and (12) of the PIT Act)
Small taxpayer status does not, however, change the rules for settling entertainment costs, business travel costs or the costs of using a passenger car for business purposes – these are the same for all PIT taxpayers. Quarterly advances and one-off depreciation are the main simplifications in income tax itself.
An entrepreneur running an online shop whose 2025 sales including VAT amounted to PLN 6 million can use small taxpayer status in 2026, because their revenue does not exceed the limit of PLN 8,517,000. As a result, they can pay quarterly PIT advances and use one-off depreciation for fixed assets entered in the register in 2026. They can keep a KPiR regardless of this status, because their net revenue is below the threshold in the Accounting Act.
Procedure for determining small taxpayer status
Determining small taxpayer status requires a detailed analysis of revenue earned in the previous tax year. This should be done at the beginning of each tax year so that the taxpayer can properly plan their tax and accounting obligations.
The first step is to collect all source documents confirming sales revenue earned in the previous tax year. These documents should include sales invoices, bills, receipts (paragony) and other evidence of business revenue.
The next step is to add up all sales revenue, remembering to add output VAT in the case of active VAT payers. Pay particular attention to the correct classification of individual items of revenue and their proper documentation.
Taxpayers who ran a business for only part of the tax year should take into account only the revenue earned during the period of activity. The provision does not require revenue to be converted to a full tax year when determining small taxpayer status
Once all revenue has been added up, compare the total with the applicable limit. If sales revenue for 2025 does not exceed PLN 8,517,000, the taxpayer can use small taxpayer status in 2026.
Records and bookkeeping for small taxpayers
Most small PIT taxpayers keep simplified records, but this results from the Accounting Act threshold, not from small taxpayer status itself. The basic form of record-keeping is then the KPiR, which replaces complex accounting books.
The KPiR can be kept on paper or electronically – except that taxpayers filing the JPK_V7 from 2026, and all others from 2027, must keep it using computer software (Article 24a(1e) of the PIT Act, Article 66(1) of the Act of 29 October 2021). Whichever form you choose, it must contain all the required elements and be kept in line with the applicable regulations.
| Record element | Requirements | Frequency | Source documents |
|---|---|---|---|
| Revenue | Chronological entries | On an ongoing basis | Invoices, bills |
| Expenses | Division into categories | On an ongoing basis | Cost invoices |
| Fixed assets | Depreciation register | Monthly | Purchase documents |
| Stock | Stocktaking | Annually | Warehouse documents |
Small taxpayer status does not exempt you from keeping a register of fixed assets and intangible assets (Article 22n of the PIT Act). The simplification is one-off depreciation up to the EUR 50,000 limit, while items worth up to PLN 10,000 can be expensed at once by any taxpayer (Article 22d(1))
Keeping VAT records is also an important part of documentation if the taxpayer is an active VAT payer. VAT records must be kept separately from the KPiR and contain all the required information on VAT. Our accounting firm prepares VAT records and JPK files for clients together with the KPiR.
Small VAT taxpayers also benefit from simplifications regarding tax returns. They can file the VAT return quarterly (JPK_V7K), while the records are still submitted for each month.
Tax planning for small taxpayers
Effective tax planning is a key element of financial management for small taxpayers. Knowing the available simplifications and reliefs helps you plan your tax burden better while remaining fully compliant with the law.
Small taxpayers have several rights that should be taken into account in planning. They cover both the choice of how to pay advances and the planning of investments and business costs.
One important element of planning is monitoring revenue during the tax year. Taxpayers approaching the limit (for status in 2027: PLN 8,754,000 of sales revenue in 2026) should consider different strategies to keep small taxpayer status or prepare for losing it.
- Regular monitoring of sales revenue
- Planning the timing of larger transactions
- Planning the structure of business costs
- Using available tax reliefs and exemptions
- Preparing for a possible change of tax status
Taxpayers planning significant investments should consider their impact on small taxpayer status. Some transactions may affect the amount of sales revenue and therefore the ability to keep this favourable tax status
Another important aspect of planning is preparing for the possible loss of small taxpayer status. Taxpayers whose revenue may exceed the limit should prepare in advance for returning to monthly advances and losing the right to one-off depreciation, and if they exceed the Accounting Act threshold – also for having to keep full accounting books.
A consulting firm with sales (including VAT) of PLN 8 million a year is planning a large project worth PLN 800 thousand. Carrying out this project in 2026 would mean exceeding the PLN 8,754,000 limit and losing small taxpayer status in 2027. The entrepreneur may consider moving part of the work to the next tax year to keep the favourable tax status.
