Umowa o dzieło is one of the simplest contracts concluded in Poland between a client and a contractor.
This type of contract is used when performing work for clients involves creating a specific project or work – so-called dzieło (IMPORTANT: this must be a one-off relationship, not an ongoing one).
The contract provides:
- lower taxation – only income tax (PIT) is paid;
- more flexible working conditions;
- the option of applying a 20% / 50% rate for tax-free expenses;
- no obligation for health insurance – NFZ;
- no obligation for social insurance – ZUS.
The contract can be drawn up in any form, provided that it specifies:
- the type and description of the work performed;
- the timeframe for completing the work;
- information on the contractor's remuneration.
There are no restrictions for foreigners. Polish employers can use "umowa o dzieło" both with EU citizens and with foreigners from third countries (Russia, Ukraine, Belarus, Kazakhstan, etc.).
Provided that, for the foreigner, the employer has registered the appropriate document authorising them to work:
- "invitation to work" – oświadczenie,
- work permit – zezwolenie na pracę,
- "labour market test" – opinia starosty.
Unless the foreigner is exempt from that requirement, e.g. holds permanent residence, an EU Long-term Resident Card, a Karta Polaka, a Polish university diploma, or in other cases.
Taxes arising from the "umowa o dzieło"
As we already noted above, this contract carries no mandatory contributions for health or social insurance, so the monthly tax burden is significantly lower.
Only advances for personal income tax – PIT – are paid.
Expenses excluded for tax purposes amount to 20% or 50%, depending on whether you transfer copyright to the project (work) you have created. The remaining amount is taxed with the specific PIT tax at a rate of 17%.
Eligibility to use this contract
Once again we should point out that use of this contract comes with a number of strict requirements imposed by law.
The work performed must have the characteristics of the aforementioned dzieło, i.e. a project. Using this type of contract for any activity involving the provision of recurring services is unlawful.
If public authorities identify facts indicating improper use of this type of contract, in addition to reclassifying the relationship, the parties will be required to pay all unpaid charges.
Examples of when this contract CANNOT be used
- consultancy;
- online customer service;
- software development and its continuous updating;
As we noted above, a properly drafted contract with a client must contain detailed technical specifications – specyfikacja.
Note: any work with ongoing and repetitive characteristics that at the same time does not have detailed and precisely defined objectives:
a programmer's work on various projects, the work of a designer who receives a new task every day, running webinars or online classes – is equivalent to permanent employment.