The choice between lump-sum recorded tax and KPiR has a direct impact on the amount of tax and contribution burden. Find out which form of settlement will be more advantageous for your business in 2026.
Every entrepreneur running a sole proprietorship must choose a form of taxation – and this decision has a real impact on the amount of tax, health insurance contribution, and bookkeeping obligations. The two most popular options are lump-sum recorded tax (ryczałt ewidencjonowany) and the revenue and expense ledger (KPiR). Both forms differ fundamentally: in the method of determining the tax base, available reliefs, and the complexity of record-keeping. In this article we explain exactly how lump-sum tax differs from KPiR, what flat-rate tax rates apply in 2026, and how to choose the solution best suited to your industry and business model.
Lump-sum recorded tax (ryczałt ewidencjonowany) is a simplified form of taxation in which the tax is calculated on revenue – without the possibility of deducting costs of obtaining revenue. The tax rate depends on the type of activity performed and can range from 2% to 17%. The most important flat-rate tax rates in 2026: • 17% – liberal professions (e.g. doctors, lawyers in certain cases) • 15% – including advertising services, financial intermediation • 14% – healthcare services, architecture, engineering • 12% – programmers, IT analysts, IT consultants • 8.5% and 12.5% – private rental (up to PLN 100,000 and above) • 8.5% – catering services, some construction services • 5.5% – manufacturing activities, construction works • 3% – trade, catering activities without alcohol • 2% – sale of processed plant and animal products Record-keeping is simplified – you maintain a revenue register rather than a full ledger.
The revenue and expense ledger (KPiR) is a record-keeping method used under general taxation rules (tax scale: 12% and 32%) or flat income tax (19%). The key difference compared to lump-sum tax is that the tax base is income, i.e. revenue reduced by the costs of obtaining that revenue. KPiR therefore allows you to account for: • purchases of goods, materials, and fixed assets • employee remuneration and ZUS contributions • office rental costs, car leasing • expenditure on marketing, training, software The higher the costs in the business, the lower the tax. Maintaining KPiR requires greater discipline and diligence, although with the help of accounting tools and cooperation with an accounting office this is not a complicated process.
The choice of settlement form affects not only income tax but also the amount of the health insurance contribution – which, following the reforms of recent years, is of considerable significance. Under lump-sum tax, the health insurance contribution is a fixed amount dependent on the revenue bracket: 1. Up to PLN 60,000 of annual revenue – lowest contribution 2. From PLN 60,000 to PLN 300,000 – medium contribution 3. Above PLN 300,000 – highest contribution Under the tax scale (KPiR), the contribution amounts to 9% of income, which at high income levels generates a significant burden. Under flat income tax (19%, KPiR), the health insurance contribution is 4.9% of income, with a lower limit. Choosing a form of taxation is therefore a multi-dimensional calculation – encompassing the total tax and contribution burden.
Lump-sum tax works best primarily when: • the activity generates high revenue with low costs (e.g. freelancer, programmer, consultant) • you benefit from a rate of 12% or lower • you want simple record-keeping and low accounting service costs • you do not incur significant costs of obtaining revenue that you could deduct Example: A programmer earning PLN 180,000 in annual revenue, with minimal costs, will pay lump-sum tax of 12% on the full amount – and will often be better off than under flat income tax with KPiR, particularly taking into account the lower health insurance contribution at the middle bracket. Lump-sum tax is unavailable for certain professions and for those exceeding the limit of EUR 2 million in annual revenue.
KPiR (combined with flat income tax or the tax scale) is worth considering when: • the business incurs high operating costs (materials, external services, salaries) • you run a trading or manufacturing activity with a high share of goods purchase costs • you plan to use tax reliefs (e.g. R&D relief, IP Box) • your net margin is low – tax calculated on revenue would be higher than on income Example: A construction company with revenue of PLN 500,000 and costs of PLN 400,000 will pay tax on PLN 100,000 of income (KPiR, flat rate 19%), rather than on PLN 500,000 of revenue (lump-sum tax 5.5% = PLN 27,500). In this case both options may yield a similar result – a detailed calculation is essential. KPiR is also necessary when you plan to offset losses from previous years.
Before choosing a form of taxation, answer a few questions: 1. What is your projected annual revenue? 2. What level of costs of obtaining revenue do you actually incur? 3. What flat-rate tax rate applies to your industry? 4. Do you want the ability to use tax reliefs? 5. How important is simplicity of settlement to you? On this basis it is possible to prepare a comparative simulation – setting out the total tax and contribution burden for both forms. Without such an analysis it is difficult to speak of an informed choice. Please note: a change of taxation form is generally possible once a year, by the 20th day of the month following the month in which you earned your first revenue (or by 20 February if you have been operating since the beginning of the year).
The choice between lump-sum tax and KPiR is not straightforward – it depends on the industry, cost structure, revenue level, and the individual situation of the entrepreneur. If you want to be certain that your form of taxation is optimally selected, contact the Danexis accounting office. Our advisors will prepare an individual simulation for you and help you make a decision based on concrete figures. Call us at +48 780 760 666 or write to kontakt@danexis.pl.