We hear this question from almost everyone starting a business in Poland or planning changes for the new year. The lump sum (ryczałt) and the KPiR (tax revenue and expense ledger) are the two most popular forms for sole proprietorships and partners in partnerships. The whole difference comes down to one thing: what you calculate your tax on.
What the difference is
In the KPiR you pay tax on income — revenue minus the costs of earning it. You can therefore deduct business expenses: equipment, fuel, services, subscriptions. Under the lump sum, tax is calculated on revenue, with no right to deduct costs — but at a lower percentage rate.
| Criterion | Lump sum | KPiR |
|---|---|---|
| Tax base | Revenue (no costs) | Income (revenue − costs) |
| Deductible costs | Not deductible | Deductible |
| Rate | 2% / 3% / 5.5% / 8.5% / 10% / 12% / 12.5% / 14% / 15% / 17% by industry | Scale 12% and 32%, or flat 19% |
| Records | Simple — revenue records only | Fuller — revenue and costs |
| Health contribution | Flat amount (by revenue bracket) | On income (flat tax 4.9% / scale 9%) |
| Best for | Low costs: IT, services, rentals | High costs: trade, manufacturing |
When the lump sum pays off
- You have low business costs (services, liberal professions, IT).
- Your industry qualifies for a low rate — e.g. 8.5%, 12% or 14%.
- You value simple records and fewer obligations.
- Your revenue does not exceed the EUR 2 million annual limit.
When the KPiR pays off
- You incur high costs (goods, materials, subcontractors, equipment).
- You want to lower your tax base through depreciation and business expenses.
- You settle with the flat tax (19%) or on the scale and use reliefs and the tax-free amount.
The health contribution trap
This is where most people get it wrong. Since 2022 the health contribution has depended on your form of taxation, and in 2026 it started from a higher minimum, because the announced reduction was vetoed by the President. On the lump sum the contribution is a flat amount that jumps once revenue crosses PLN 60,000 and PLN 300,000. On the scale it is 9% of income, and on the flat tax 4.9%. Looking at "the tax alone" can therefore lead you astray. What matters is what actually leaves your pocket, contribution included.
How to settle it
There is no ready-made answer, because the result depends on how much you spend on the business, what industry you are in and what you plan for the year. The only reliable way is to run both scenarios on your own numbers. Do it before the year starts, because the form can only be changed within a set deadline — and then you wait another twelve months.
We prepare exactly this comparison as part of our free quote. You get an estimate of the burden under the lump sum and the KPiR side by side, so you can see at once where more stays with you.