Business activity

Non-registered business activity

Non-registered business activity is a small income-generating activity of natural persons that does not require registration of a company with CEIDG.

The prerequisite for conducting non-registered business activity is the meeting of several criteria:

• trading revenue does not exceed 50% of the minimum wage in any month, i.e.:
  • PLN 1,505.00 (2022)
  • PLN 1,745.00 (between January and June 2023)
  • PLN 1,800.00 (between July and December 2023)
• you are a natural person
• you do not conduct business activity in the form of a partnership
• you are not engaged in business activity that requires permits or licenses (for information on this topic, see the ‘business activity’ tab)
• you did not conduct business activity within the last 60 months
• non-registered business activity can be carried out by a minor (aged 13-18), although this is associated with certain legal restrictions. This means that such a person cannot perform legal acts in their own name, e.g., they cannot independently conclude contracts with their contractors for the supply of goods or the sale of products. They will need consent of a legal representative, usually a parent or guardian, to incur obligations.

How to set up non-registered business activity?

Non-registered activity does not need to be reported to CEIDG, Social Insurance Institution or Tax Office, but there are a few things you need to keep in mind:

• it is necessary to keep a simplified record of sales, i.e. a revenue and expense ledger, which is subject to possible control by the Tax Office
• account revenues from non-registered business activity (after deduction of expenses) once a year in the annual PIT-36 return, according to the tax scale
• observe the rights of consumers
• if requested by the buyer – issue invoices or receipts

IMPORTANT!

Conducting non-registered business activity entails the loss of an unemployed person status.

Registered business activity

• If you have Ukrainian citizenship and live in Poland, you have the right to conduct business activity in Poland on the same terms as Polish citizens
• In order to conduct registered business activity, you must be an adult.

You can register your business online: biznes.gov.pl/pl or do it at one of the business service centres at your place of residence. Such centres are located in municipal/city offices.

Before you start filling out the form, it is worth having a few key things in mind:

• Company name – should contain at least first name and surname
• Business address – it is up to you to choose where you want to conduct business activity, which means you can run your business at one or more fixed locations, either in your own apartment or without a fixed address or in a mobile mode. If you indicate a place of business, you must have legal title to any property the address of which you report to CEIDG.

Legal title to real estate can take a form of: ownership or co-ownership of real estate or housing unit, perpetual usufruct of land with ownership right to buildings, cooperative ownership right to the housing unit, lease, rental or lending for use.

• Choice of PKD (Polish Classification of Activity) code – each business activity must be assigned to a specific Standard Industry Code (SIC)
  Before registering your company – search for the code that best suits what you want to do. Select one main code and any number of additional codes.
  A link to a code search engine below: biznes.gov.pl/pl/tabela-pkd
• Check whether the activity you want to perform in Poland does not entail the need for an additional permit
• Choose a form of taxation

An important duty associated with registering a business activity is to choose a form of taxation:

• under general rules, according to the tax scale (tax rate of 12% and 32%)
• on a flat rate basis (tax rate of 19%)
• as a lump sum on registered income without deductible costs.

TAXATION UNDER GENERAL RULES:

Taxpayers taxed under general rules pay their tax according to the tax scale. When determining the amount of tax according to the tax scale, you take into account the tax-reducing amount. Since 2022 this has amounted to PLN 5,100.

Check how much the tax will be for a certain base:

Taxable base in PLN	Tax amounts to
up to 120,000	12% minus PLN 5,100
above 120,000	PLN 15,300 + 32% surplus over PLN 120,000

Taxation under general rules entitles one to a number of tax reliefs and deductions. These are, in particular:

• child relief
• relief for employees or taxpayers earning income from non-agricultural business activity, i.e., middle class reliefs
• deduction for social security contributions
• relief for hiring innovative workers
• prototype relief
• robotisation relief
• expansion or development relief
• consolidation relief
• relief for acquisition of a payment terminal
• research and development relief
• IP BOX relief
• ­­­deduction on contributions to an Individual Pension Insurance Account (IKZE)
• deduction on donations for religious purposes and for sports, cultural activities, supporting higher education and scienceę
• rehabilitation relief
• Internet relief
• thermal modernisation relief
• relief for activity in the special investment zone
• blood donation relief.

Important! If you settle income taxes under general rules (according to the tax scale) or on a flat rate basis, and your income for the month is lower than the minimum wage in effect for a given year, the amount of the health insurance contribution for that month will amount to 9% of the minimum wage.

Minimum wage in 2022 amounts to gross PLN 3,010. This means that the minimum health insurance contribution in 2022 will amount to PLN 270.90, between January and June 2023 – PLN 314.10 and between July and December 2023 – PLN 324.00

• In the case of the flat rate (19%), income is the subject of taxation.
• In the case of a lump sum from registered income without deductibles, revenue is the subject of taxation.

IMPORTANT! Income is revenue less deductible expenses, i.e. business expenses

INCOME = REVENUE - EXPENSES

The tax scale (taxation under general rules) is the basic form of taxation of business income; therefore, you will automatically be taxed under general rules unless you choose another form of taxation.

Check if you will be a VAT payer – if you need to register your activity as a VAT payer you will need to set up a company bank account

REGISTRATION AS VAT TAXPAYER:

As a rule, all entrepreneurs should register for VAT, but you do not have to do so if:

• sales do not exceed the limit of PLN 200 thousand per year (subjective exemption)
• sales concern VAT-exempt goods and services only

According to Article 43(1)(19) of the VAT Act exempt from VAT are medical care services for the prevention, preservation, rescue, restoration and improvement of health provided as part of professional practice of:

• physician and dentist,
• nurse and midwife,
• medical professions referred to in Article 2(1)(2) of the Act on Health Care Activity,
• psychologist

Identify the account associated with running the company. Entrepreneurs who are not registered as VAT payers can use a company account or their private account for business activities. However, it must be an account that has a single holder only.

• Determine the place of storing accounting documents (invoices, receipts, documents confirming the incurrence of expenses).
• Consider whether you want to take advantage of social security exemptions and in what form (relief for starting a business, preferential social security contributions)

NOTIFICATION OF CONDUCTING A BUSINESS ACTIVITY TO THE SOCIAL INSURANCE INSTITUTION

When starting a business in Poland, there are two types of reliefs available:

• ULGA NA START ( MAX. 6 MIESIĘCY):

RELIEF FOR STARTING A BUSINESS (MAX. 6 MONTHS):

The relief is available to entrepreneurs who:

• are natural persons, i.e. they are sole proprietors or partners in civil partnerships
• start a business for the first time or restart it after at least 60 months have passed since its last suspension or termination
• do not perform activities for a former employer with whom they worked on a full-time basis in the current or previous calendar year and performed activities that are part of their current activities.

For six full months after starting a business the relief exempts from paying the following contributions:

• social insurance, i.e. pension, disability and accident insurance
• Labour Fund
• Solidarity Fund.

The relief for starting a business does not apply to health insurance. This means that you have to register for health insurance and pay a monthly health premium. You also have the right to enroll your family members in the health insurance scheme during the period of using the relief for starting a business.

The relief for starting a business does not only mean privileges. Keep in mind that during the period when you do not pay contributions, you do not save them for your retirement pension or disability pension. You will also not receive benefits in case of illness or accident.

If you decide to take advantage of the relief for starting a business, you must report to the Social Security Institution for health insurance within 7 days of starting your business. In that case the title of the insurance begins with 05 40 digits.

The other two figures depend on whether you have an established right to a retirement pension or disability pension and whether you have a disability certificate.

If you do not have an established right to a retirement pension/disability pension or a disability certificate, then your code is 05 40 00.

If you are entitled to a retirement pension/disability pension or have a disability certificate, you enter the last two digits depending on your situation, according to the instructions below.

The fifth digit of the Social Insurance Institution code:

• 0 – if you do not have an established right to a retirement pension or disability pension,
• 1 – if you have an established right to a retirement pension,
• 2 – if you have an established right to a disability pension.

(ZUS ZZA form)

When you take advantage of the relief for starting a business, you only pay the health premium for yourself.

If you settle the income tax under general rules (according to the tax scale i.e. income and expense ledger), the health insurance premium is 9% of the contribution assessment base.

• PREFERENTIAL SOCIAL SECURITY CONTRIBUTIONS (MAX. 24 MONTHS)

Jeśli chcesz płacić obniżone składki, po okresie sześciomiesięcznej uli na start, powinieneś:

If you want to pay reduced contributions after the six-month period of the relief for starting a business you should:

• deregister from health insurance on the ZUS ZWUA form with the insurance title code beginning with the 05 40 digits
• report for health insurance on the ZUS ZZA form under reduced premiums with the insurance title code beginning with 05 70 digits.

You can pay lower social security contributions if you meet two conditions in aggregate:

• you are not engaged in, or have not engaged in, any other non-agricultural activity in the last 60 calendar months prior to the date of starting a business activity
• you do not conduct business activity for a former employer with whom you worked on a full-time basis in the current or previous calendar year and performed activities that are part of your current activities.

New sole proprietorships or partners in a civil partnership can pay lower social security contributions for a full 24 calendar months, calculated on a reduced base. The reduced base cannot be less than 30% of the minimum wage.

In 2022, the reduced base amounts to 30% of PLN 3,010, or PLN 903.

In 2023, the reduced base will be PLN 1,047.00 in the period from January to June and PLN 1,080.00 in the period from July to December.

The reduction in social security contributions applies only to contributions paid by an entrepreneur for themselves. You must pay contributions at the normal rate for hired employees and contractors.

In 2022 the assessment bases of individual contributions are as follows:

Contribution assessment base	PLN 903.00 (30% of the gross minimum wage)	PLN 3,553.20 (60% of the projected average gross monthly salary)
Retirement pension contribution (19.52%)	PLN 176.27	PLN 693.58
Disability pension contribution (8.00%)	PLN 72.24	PLN 284.26
(Voluntary) sickness insurance contribution (2.45%)	PLN 22.12	PLN 87.05
Accident insurance contribution (1.67%)*	PLN 15.08	PLN 59.34
Labour Fund and Solidarity Fund (2.45%)	0	PLN 87.05
Total	PLN 285.71	PLN 1,211.28

Since 2022 it has been mandatory for entrepreneurs to pay health premiums annually.

The annual health contribution assessment base is the income from business activity for a given calendar year, understood as the difference between revenue and the costs of obtaining such revenue, less retirement pension, disability pension, sickness and accident insurance contributions, if they were not included in deductible expenses.

• Consider whether you will need a proxy.

A proxy is a person who can, for example, enter into contracts, accept payments or represent you before an authority or a court. You provide his/her data when registering your company.

Contact IOM if you need consultation on setting up and running a business or need support in completing business registration applications.