Entrepreneur’s text – yes or no?

A few weeks ago, the Ministry of Finance presented a novel idea for securing budget revenue from taxation on businesses for entrepreneurs. Ministry experts want to verify whether Polish sole proprietorships qualify for this status. The so-called “entrepreneur’s test” (or a test for being considered an entrepreneur), gained a lot of attention in the media and mixed reactions. After backlash from the business sector, the government announced the work on this concept had been halted.

The test (and the resulting budget revenue) was included in the draft Multi-year Financial Plan for 2019-2022. After the news about verifying sole entrepreneurs hit the headlines, one could get the impression that many people, including the Minister of Entrepreneurship and Technology officials, are not very excited about this solution.

The Importance of Businesses for Entrepreneurs:

The test in question has numerous critics who claim the lawmakers want to hinder economic freedom and that the Polish business environment does not need more restrictions. Obviously, people running sole proprietorships are not fond of the idea at all as failure to “pass” will mean higher income tax to pay. At the same time, critics of the provisions stress that such a law would be easy to bypass and therefore ineffective.

Jadwiga Emilewicz, the head of the Ministry of Entrepreneurship, said there will be talks with the Ministry of Finances on the matter, which suggested the government is not in unison about this. Several days later it was announced that the government would abandon the project. The Prime Minister officially confirmed the news.

Meanwhile, officials stress that in Polish business law, there are already provisions that enable verifying the status of sole proprietorships. This suggests the government is indeed going to focus on microentrepreneurs and especially taking into consideration the fact that money needs to be found to finance new budget expenses, such as the 13^th pension.

What This Means for Businesses in Poland

Tax policy changes in Poland have direct implications for both domestic and foreign-owned businesses. Companies operating in Poland must stay informed about regulatory developments to optimize their tax position and maintain compliance. The Polish tax system includes CIT (19% standard, 9% for small taxpayers), VAT (23% standard rate with reduced rates of 8% and 5%), and various sector-specific levies.

For international entrepreneurs and investors, understanding the Polish tax landscape is essential for business planning. Poland offers several attractive incentives including the Polish Investment Zone (up to 15 years of CIT exemption), R&D tax relief (up to 200% deduction), and the IP Box regime (5% effective CIT rate on qualified intellectual property income). Professional tax advisory can help identify the most beneficial structure for your specific situation.

The interplay between Polish domestic tax law and international tax treaties is particularly important for foreign-owned entities. Transfer pricing regulations, withholding tax provisions, and anti-avoidance rules (GAAR) require careful navigation to ensure both compliance and optimization.

If you are doing business in Poland or considering entering the Polish market, Zalewski Consulting can help. Learn more about our tax advisory services in Poland, or contact us for a free consultation.