What is Ryczałt Ewidencjonowany?

Ryczałt od przychodów ewidencjonowanych (lump-sum tax on recorded revenue) is one of the simplified forms of business taxation in Poland. Its defining feature is that tax is calculated on revenue, not on income -- meaning the entrepreneur cannot deduct business expenses from the tax base. The annual return is filed using the PIT-28 form.

The legal basis is the Act of 20 November 1998 on lump-sum income tax on certain revenues earned by natural persons. This form of taxation is available to individuals running a sole proprietorship and to partners in civil partnerships (spolka cywilna) or general partnerships (spolka jawna) of natural persons.

Who Can Use Ryczałt?

Entrepreneurs can opt for the lump-sum tax if they:

  • run a sole proprietorship (JDG) or are partners in a civil or general partnership of natural persons,
  • earned revenue not exceeding the equivalent of 2,000,000 EUR in the previous tax year (converted at the NBP exchange rate as of 1 October of the preceding year),
  • do not operate a pharmacy, pawn shop, currency exchange, or trade in vehicle parts and accessories (the full list of exclusions is in the act),
  • filed a declaration of choosing ryczałt within the statutory deadline (by the 20th day of the month following the month of earning the first revenue, or by 20 February if continuing activity from the previous year).

Ryczałt Tax Rates

The rate depends on the type of business activity. The act provides the following rates:

| Rate | Type of activity | |---|---| | 17% | Liberal professions (doctors, lawyers, architects, engineers, translators) | | 15% | Most intangible services (brokerage, consulting, advertising, staff leasing) | | 14% | Healthcare services, architectural and engineering services, technical research and analysis | | 12.5% | Private rental -- revenue exceeding 100,000 PLN | | 12% | IT services (programming, software consulting), photographic services | | 10% | Buying and selling real estate on own account | | 8.5% | Private rental (up to 100,000 PLN revenue), catering services, educational services | | 5.5% | Manufacturing, construction works | | 3% | Retail and wholesale trade, catering (sale of alcoholic beverages above 1.5%) | | 2% | Sale of plant and animal products from own cultivation/breeding |

A single entrepreneur may apply several rates simultaneously if they conduct different types of activity -- the condition is maintaining revenue records broken down by each applicable rate.

Record-Keeping Obligations

A taxpayer on ryczałt must maintain:

  • revenue records -- separate for each ryczałt rate,
  • a register of fixed assets and intangible assets,
  • an equipment register (assets worth more than 1,500 PLN).

There is no requirement to keep a Revenue and Expense Ledger (KPiR), which represents a significant administrative simplification.

Advantages of Ryczałt

  • Simplicity -- no need to document and account for business expenses.
  • Lower tax when costs are low -- if operating expenses are minimal (e.g., intangible services, freelancing), ryczałt can be cheaper than the progressive scale or flat tax.
  • Favorable rates for selected industries -- for example, 12% for programmers is often better than the 19% flat tax.
  • Less administrative burden -- simplified records instead of full KPiR bookkeeping.
  • Lower health insurance contribution -- under ryczałt, the health insurance premium is lump-sum based on revenue brackets, which can be advantageous at higher revenue levels.

Disadvantages of Ryczałt

  • No expense deduction -- tax is paid on revenue, not on profit. If business costs are high (materials, salaries, rent), ryczałt can be unfavorable.
  • Limited tax deductions -- many deductions available under the progressive scale are not available.
  • No joint filing with spouse -- similar to the flat tax.
  • Not available for all activities -- certain types of business are excluded from ryczałt.

When Ryczałt is NOT Worth It

The lump-sum tax is disadvantageous primarily when:

  • business costs are high (above 40--60% of revenue) -- in such cases, the progressive scale or flat tax may result in lower taxation,
  • the activity requires significant capital expenditure (machinery, equipment) that cannot be deducted,
  • the entrepreneur wants to use tax reliefs (e.g., child tax credit, IP Box relief),
  • income is low, and the tax-free amount (30,000 PLN under the progressive scale) would be sufficient to substantially reduce the tax liability.

To check which form of taxation is most beneficial in your situation, use the ryczałt calculator or the ryczałt vs. progressive scale comparison at kalkulatory.lintax.pl.

Ryczałt and ZUS Contributions

An entrepreneur on ryczałt pays ZUS contributions on general terms (social insurance and Labor Fund). However, the health insurance contribution is calculated differently than under other taxation forms:

  • 60% of average salary for annual revenue up to 60,000 PLN,
  • 100% of average salary for revenue from 60,000 to 300,000 PLN,
  • 180% of average salary for revenue above 300,000 PLN.

The health insurance contribution under ryczałt is partially deductible from revenue (50% of the paid contribution).

Ryczałt and VAT

Ryczałt ewidencjonowany applies exclusively to income tax (PIT). Obligations related to VAT are independent -- an entrepreneur on ryczałt can be either an active VAT taxpayer or benefit from the VAT exemption (up to 200,000 PLN annual turnover).

Summary

Ryczałt ewidencjonowany is an attractive form of taxation for entrepreneurs with low operating costs, particularly in industries with favorable rates (IT, services, rental). Before making a decision, it is worth carefully comparing ryczałt with the progressive tax scale and calculating the actual tax burden including ZUS contributions. If you need help choosing the right form of taxation, consult a tax advisor or the LinTax accounting firm in Wrocław.