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Forms of business taxation
In Poland business owners can choose from various forms of taxation of business activities. Choosing the right form is crucial, because it affects the amount of taxes paid, the method of bookkeeping and the possibility of using tax reliefs. Below we present the available forms of taxation and their characteristics.
Tax scale (general rules)
This is the basic form of taxation of personal income, with two tax rates:
- 12% – for income up to PLN 120,000 per year.
- 32% – for income above PLN 120,000 per year.
Advantages:
- Possibility of using the tax-free amount (PLN 30,000 per year).
- Access to numerous tax reliefs, such as child tax relief or rehabilitation relief.
- Possibility of joint settlement with spouse.
Defects:
- Higher tax rate (32%) for income exceeding PLN 120,000.
Flat tax
The flat tax is characterized by a fixed tax rate of 19% regardless of income level.
Advantages:
- Beneficial for high earners as it avoids the higher 32% rate applicable to the tax bracket.
Defects:
- No possibility of using the tax-free amount.
- Limited access to tax benefits.
- No possibility of joint settlement with spouse.
Lump sum tax on recorded revenues
In this form of taxation, tax is paid on income, without the possibility of deducting the costs of obtaining income. The flat-rate rates depend on the type of business conducted and range from 2% to 17%.
Advantages:
- Simpler accounting compared to other forms of taxation.
- Possibility of applying lower tax rates for certain types of activities.
Defects:
- No deduction for costs of obtaining income.
- Not all types of activities can be taxed on a lump sum basis.
Tax card
This is a simplified form of taxation in which the tax amount is determined by the head of the tax office based on criteria such as the type of activity, number of employees or the number of inhabitants of the town where the activity is carried out.
Advantages:
- A fixed tax amount regardless of income level.
- Very simple accounting.
Defects:
- Limited scope of activities that can be taxed under the tax card.
- No deduction for costs of obtaining income.
Choosing the form of taxation
The choice of the appropriate form of taxation depends on many factors, such as the expected amount of income, the type of business activity or business management preferences. accounting. Before making a decision, it is worth consulting a tax advisor who will help you choose the most advantageous form of taxation tailored to the individual needs of the entrepreneur.
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