Flat rate and flat tax - not always possible


Lump sum on registered income and flat tax are quite popular alternative to tax settled on general principles. It often turns out that choosing one of these forms is very profitable. However, it is worth knowing that not in every case you can settle income tax with a flat rate or flat tax.

As for the lump sum, it is possible to distinguish three types of restrictions that take away the right to this form of tax. The first concerns the subject exclusions indicated in the Act on flat-rate income tax on certain revenues earned by natural persons. According to this provision, entrepreneurs who:

  • they run: a pharmacy, pawnshop, exchange office, activities in the field of buying and selling foreign exchange values, activities in the field of trade in parts and accessories for motor vehicles
  • provide loans against collateral
  • they run the company together with their spouse or the same type of business activity as the spouse
  • they produce products subject to excise duty (with the exception of electricity from renewable energy sources),
  • perform freelance professions (with the exception of the profession of a doctor of all specialties, dental technician, medical assistant, midwife, nurse, translator and teacher in the provision of educational services consisting in giving lessons by the hour),
  • they provide services listed in Annex 2 to the Act on flat-rate income tax on certain revenues earned by natural persons (including advertising, financial intermediation, detective and security services, taking advertising photos and the like).
  • they start their business independently or in the form of a partnership, if the taxpayer or at least one of the partners, prior to the commencement of business activity in the tax year or in the year preceding the tax year, performed activities falling within the scope of the taxpayer's or company activities under the employment relationship or a cooperative employment relationship.

The second type of exclusion applies to entrepreneurs who were or are employed under an employment contract and, as part of their own business, plan to perform for the former or current employer the same activities as in the last two tax years they were performed under an employment relationship. Entrepreneurs who plan to choose a flat tax for their company are also in the same situation.

The third exclusion applies to entrepreneurs who continue their activities in a given tax year. If it turns out that in the previous tax year your operating income exceeded EUR 150,000, you will have to opt out of the flat tax.

It is also worth remembering that the choice of the form of taxation is limited by time limits. During the tax year, only the taxpayer who sets up a new company can decide on a flat rate or flat tax. On the other hand, an entrepreneur already running a business must submit an application to the head of the competent tax office by January 20 of the new tax year. Importantly, the choice of a form of taxation other than general tax cannot be withdrawn during the year - if the taxpayer decides to do so, the next change will be possible only in the next tax year.