In today’s world of entrepreneurship, business owners often face an important question: which form of taxation should they choose for their business? This decision may have a significant impact on the company’s costs and tax burden, so it is worth considering carefully. As part of its economic consulting services in Poland, MAGFIN is pleased to provide you with assistance in solving key issues related to the selection of the optimal form of taxation.
What should you consider when choosing a tax system?
First of all, entrepreneurs must consider the business goals and organizational structure of their company. The form of taxation may vary depending on whether you run a sole proprietorship, a partnership or a capital company. Therefore, before making a choice, it is worth consulting specialists in the field of economic consulting.
Achieving optimal financial results largely depends on choosing the appropriate form of business taxation.
What MAGFIN can help you consider:
- non-taxable expenses (flat tax or general tax);
- health insurance premium – has a direct impact. Should I choose a flat rate (4.9% of income) or general terms (9% of income)?
- settlement of tax losses (general or straight-line method);
- settlement with your spouse (on general terms);
- availability of tax reliefs (most entrepreneurs operate on general principles);
- different forms of accounting – different financial accounting requirements, etc.
What is legal tax minimization?
Tax minimization is legal and fully acceptable under Polish law, subject to applicable regulations. By working with expert business advisors, you can find ways to reduce your company’s income tax by taking advantage of available tax benefits and benefits.
Legal minimization of the tax burden should be understood as all actions that a taxpayer can take to pay lower tax. This may come down to taking advantage of reliefs and preferences, e.g. by jointly settling income tax for a given tax year with your spouse or as a single parent.
Please note that this is in no way a case of hiding income or tax evasion. The first step is to research your specific situation.
What is the tax scale?
The tax scale determines the percentage of income tax that the company must pay in the course of running its business. Poland has a complex system of tax scales that vary depending on the type of income and the size of the company. Our service and consulting company MAGFIN offers comprehensive assistance in understanding and adapting to these rules.
Operating income and losses are determined on the basis of revenues and costs. Then the taxpayer makes deductions:
a) social security contributions;
b) contributions to a retirement account;
c) contributions to trade unions;
d) rehabilitation costs;
e) Internet costs;
f) donations, professional training, etc.;
g) benefits in terms of robotization, prototyping, etc.
After making deductions, the taxpayer is subject to taxation according to the tax scale table.
Currently, the tax scale for 2023/2024 – tax thresholds for PIT income tax settlements
| Tax calculation basis in PLN | The tax is | |
| above | down | |
| 120,000 | 12% minus the tax reducing amount of PLN 3,600 | |
| 120,000 | PLN 10,800 + 32% of the surplus over PLN 120,000 | |
| 1,000,000 | PLN 10,800 + 32% of the surplus over PLN 120,000 plus an additional 4% on the surplus over PLN 1 million of the base (i.e. the so-called solidarity levy) | |
What are the differences between the forms of taxation?
Forms of taxation in Poland include general taxation, lump sum taxation and tax cards. Each of these forms has its advantages and disadvantages. For example, tax rates, administrative burdens and access to different tax forms differ. The choice of the optimal form of taxation should take into account the specific nature of the company’s activities.
Changing the form of taxation – is it possible?
Yes, it is possible to change the form of taxation, but this is associated with certain restrictions and tax consequences. Before deciding to change the form of taxation, it is worth carefully analyzing whether it will be beneficial for the company. Our business consulting experts can help you with this process.
Moreover, it is worth noting that methods of avoiding double taxation, tax planning and choosing the appropriate method of business taxation are key issues that are worth discussing with our business consulting experts. Thanks to this, together we will be able to find the best solutions that will minimize the tax burden on your company.
To sum up, we note that choosing the right form of taxation and effective management of the tax burden are key elements of running a successful business in Poland. Our company MAGFIN is ready to provide you with comprehensive support in the field of economic consulting and help you achieve financial success. Contact us to discuss your needs and business goals.
