Choosing a taxation method is one of the most important decisions an entrepreneur must make. Importantly, the initial choice isn't final. Changing the taxation method can be a key step in tax optimization, allowing you to retain more funds within your company.
The decision to change can be made once a year – the deadline is the 20th day of the month following the month in which the first income was earned in a given tax year.
When is it worth considering a change?
It's worth conducting a profitability analysis whenever revenues, company costs, or legal regulations change. Here are some situations where changing your taxation method can bring tangible benefits:
1. Significant increase in income
As your income increases, remaining on the General Rules (tax scale) may become disadvantageous. Once you exceed the tax threshold of PLN 120,000, you enter the 32% tax rate.
In such a situation, the solution is to switch to a flat tax. This offers a fixed rate of 19% regardless of income. This option is designed for high-income earners, for whom losing their tax-free allowance is less painful than paying a 32% tax.
2. Low-cost business
For companies that do not generate large costs of obtaining revenues (e.g. IT industry, consulting), settling on general principles or a flat tax may be ineffective.
In such a situation, it's worth considering switching to a flat-rate tax on recorded income. Tax is then calculated on income, without taking into account expenses. Rates are often very attractive, ranging from 2% to 17%, depending on the type of business.
However, there is one condition: your industry cannot be excluded from the lump sum and your annual revenue limit cannot exceed €2 million.
3. High-cost activities
If you're planning large investments or your business's specific nature requires high ongoing expenses, then a flat-rate tax is likely a poor choice. It won't allow for deductions. In such cases, you should consider switching to the general tax system or a flat-rate tax. The choice between these two forms depends on your projected income.
4. Willingness to take advantage of tax relief and joint settlement
Family situation also influences the choice.
Only these general rules allow you to file jointly with your spouse or as a single parent. Additionally, you benefit from a tax-free allowance (PLN 30,000) and numerous tax reliefs not available under the flat-rate or lump-sum tax system.
How to make a change?
The change reporting process is simple and can be completed in two ways:
- Online (via CEIDG): By logging in to Biznes.gov.pl, completing the application for changing the company details and indicating the new form in the "Declaration on the form of paying income tax" section.
- Traditionally: By submitting a paper declaration to your tax office.
Administrative courts also indicate that the choice of taxation method will be binding on tax authorities by the tax transfer title – PIT-36 (general rules), PIT-36L (flat tax), PIT-28 (lump sum). However, it should be remembered that such a transfer would have to be made by February 20th. This is the only deadline for changing the taxation method.
Choosing a taxation method should be preceded by a detailed analysis of income, expenses, and available tax relief. Each option has its advantages and disadvantages – for example, a flat-rate tax has low rates but doesn't allow for cost accounting, while a flat tax is simple but eliminates family-friendly tax relief. If your current taxation method isn't beneficial, it's worth changing it. There's no reason not to make such changes annually.
This article is for informational purposes only and does not constitute legal advice.
The law is current as of February 16, 2026.
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