Why should you consider changing your form of taxation?

Entrepreneurs often start their business with the simplest tax scheme, which is not always the most financially beneficial. Changing your form of taxation may be advantageous in the following cases:

· Increase in revenue – some tax forms work better when turnover grows.

· Increase in business expenses – if your costs are high, the general rules may be more profitable than lump-sum taxation.

· Plans for investment or hiring employees – switching to a different tax form can impact the amount of social security (ZUS) contributions and taxes.

· Tax optimisation – analysis and simulations help choose the most beneficial tax scheme, taking into account the company’s revenue and expenses.

What tax forms are available?

Entrepreneurs in Poland can choose from several taxation methods:General rules (tax scale) – progressive tax rates of 12% and 32%, possibility to deduct expenses and claim tax reliefs.

· 19% flat tax – a fixed tax rate regardless of income, no tax reliefs.

· Lump-sum tax on registered income – a simpler method; you pay tax on revenue with no option to deduct expenses.

· The choice depends on the type of business, the level of revenue and expenses, as well as the company’s development plans.

When can you change your form of taxation?

In most cases, you can change your taxation method until 20 February of a given year for the change to apply from January. In practice, this means you must notify the tax office in advance and inform your accounting department so they can prepare the correct tax and social security (ZUS) filings.

How to change your form of taxation?

1. Analyse your current situation – review your revenue, expenses, investment plans, and hiring plans.

2. Carry out a tax simulation – calculate which tax method will be the most advantageous for you.

3. Submit an application or notification to the tax office – the deadline is 20 February for the change to apply from the beginning of the year.

4. Adjust accounting and ZUS procedures – ensure your accounting office records the change and prepares the necessary declarations.

Summary

Changing your form of taxation is a strategic decision that can significantly reduce business costs and optimise taxes. It is worth regularly reviewing your financial situation and consulting specialists to choose the most beneficial settlement method.

If you need help with analysis and tax simulations, our team can prepare the calculations and advise which taxation method will be optimal for your company.