Podatek liniowy – the flat tax allows all income from non-agricultural activity to be taxed at a 19% rate.
Disadvantages of the flat tax
The tax calculation mechanism itself remains unchanged, as the tax base is income – i.e. the difference between revenue and the costs of earning it. Revenue and costs are determined based on the KPiR or accounting books (for example, in the case of companies with legal personality).
Unfortunately, unlike with the tax scale, an entrepreneur taxed on the flat-tax basis cannot benefit from, among others:
- tax reliefs – for example the Internet tax relief or the child tax relief – if their sole source of income is business activity,
- the option of joint filing with a spouse, in which tax is calculated on half of the total joint income and the resulting amount is then doubled.
- There is also no tax-free allowance – i.e. a set amount of income (30,000 zł in 2023) on which the legislator decided not to levy tax. Flat taxation also creates the need to file a special PIT-36L declaration.
If, in addition to your business, you work full-time or perform personal work, you will need to file two separate returns for annual settlement.
Who is the flat tax for?
There are certain requirements associated with the ability to use the flat tax. The first restriction concerns the source of income that can be taxed on a flat-rate basis. Under the regulations, only income from non-agricultural business activity is taxed at the 19% rate.
Income from other sources is, as a rule, subject to taxation under general rules. In addition, when choosing the flat tax, an entrepreneur cannot provide services of the same nature to a former employer that they performed for that employer on an ongoing basis in the same tax year.
As with any form of taxation, the flat tax can be chosen when starting a business or before 20 January of a new tax year. The choice is made by submitting a properly completed CEIDG-1 form.
An application submitted to the city or municipality office will be automatically forwarded to the relevant tax office. There is therefore no need to notify the tax office separately.
What advantages does the flat tax offer?
The flat tax does, however, have certain advantages that some entrepreneurs should take note of. Chief among them are:
- A single tax rate of 19%, applicable regardless of the income earned.
- Ease of calculation. The flat tax rules out using non-taxable benefits and tax reliefs. The entrepreneur also does not need to remember the tax scale and its two resulting rates. The lack of benefits at annual settlement means fewer complex attachments, which in this case must be submitted together with the declaration.
- The income calculation mechanism is identical to the scale. The entrepreneur therefore has the option of covering costs incurred to earn, secure revenue, or preserve its source in the future.