The trend of self-employment is emerging in many countries, and Poland is no different. One way to set up your independent trade in Poland is to create a jednoosobowa działalność gospodarcza (sole proprietorship). The individual conducts a business activity for their own account and has full liability over the activities.
This article will cover the basics of self-employment in Poland and guide you through the registration process.
Disclaimer: Be aware that this article is not a substitute for legal advice. Please always check official websites or seek legal advice before you take action.
Registering the Sole Proprietorship in Poland
The CEIDG-1 Form
To register a sole proprietorship in Poland, you need to fill in the CEIDG-1 form. This form serves as registration in Poland's Central Register and Information on Economic Activity. There is no cost to register, and it can be done online, in person, or via registered mail. The CEIDG form must be signed before submission.
The CEIDG form must be submitted when starting a business activity and in the event of any changes in the register, suspension, resumption, or cessation of activity.
The application for registration in the Central Register and Information on Economic Activity must contain:
- the entrepreneur specification and the PESEL registration number (if applicable)
- date of birth
- citizenship
- place of residence of the entrepreneur, or a business address (if the activity takes place at a specific address)
- entrepreneur's NIP number and REGON number (if applicable)
- business name (which shall contain at least the name and surname of the entrepreneur)
- the object of business activity under the Polish Classification of Activities (PKD)
- the date of launching the business activity
- the income tax payment form
- contact details
In addition to the CEIDG application form, one should submit a declaration about the absence of judgments with a prohibition on the operation of economic activity, a prohibition on practicing a specific profession, and a prohibition on the operation of an activity connected with upbringing, treatment, education or care of minors.
REGON and NIP Numbers in Poland
The REGON (Rejestr Gospodarki Narodowej) is the Polish National Business Registry Number (statistical number). Any entity, including an individual entrepreneur, that conducts business in Poland, needs to be registered in the REGON registry. The Central Statistical Office assigns the REGON number. For individual entrepreneurs, the REGON number is obtained when registering with CEIDG. REGON number groups the entity's information such as the company name, the owner's name, the owner's PESEL, etc.
NIP (Tax Identification Number) is a 10-digit number which identifies entities that pay taxes in Poland. It is assigned automatically upon business registration.
Opening a Business Bank Account in Poland
In Poland, an entrepreneur is required to open a bank account.
The requirements to open a bank account depend on the banks, but in general, you will need:
- ID card
- certificate of registration in CEIDG
- a copy of the certificate of the REGON number and the NIP number
- the company's stamp
Taxation for Independent Contractors in Poland
In Poland, there is a 19% flat tax rate for individual entrepreneurs. There are no personal allowances and tax credits under the flat-rate tax system, except credits for compulsory health insurance contributions.
Alternatively, individual entrepreneur may choose taxation under general rules. In such case, progressive taxation applies, with two tax rates, depending on the annual income:
- revenue of up to PLN 85,528.00 – 17% tax rate;
- revenue above PLN 85,528.00 – 32% tax rate.
Employment Misclassification Risks in Poland
The self-employment is very popular in Poland, but in some cases it generates legal risks connected with a possible re-classification of individual business activity into an employment contract.
In practice, if a relationship between a client/company and a contractor proves to be an employment relationship, significant sanctions may be applied, including those of financial nature. Moreover, independent contractors may be reclassified to employees.
Provided the above, the nature of the working relationship will be the determining factor upon assessment. The Labor Code assesses the working relationship as employment based on two major factors:
- The work performance of a specified type for the benefit of and under the supervision of an employer and
- At a place and time specified by the employer
- Provided the above, it is important to define parties' intentions and, if they do not want to conclude a contract of employment, to carefully draft a contract between the individual entrepreneur and the company so that it is a service agreement which will not be qualified as employment relationship. In particular, such B2B contract shall ensure flexibility and independence of an individual.
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