Flat-Rate Tax 2027 - Who Will Lose Access to the Ryczałt and What Are the Alternatives?

A revolution in the flat-rate tax on recorded revenue - what is changing?

The Ministry of Finance is working on changes that, from 1 January 2027, could radically alter the tax position of tens of thousands of Polish entrepreneurs. The flat-rate tax on recorded revenue (ryczałt) - until now one of the simplest and most favourable forms of taxation - will become unavailable to those with higher revenue. The changes will hit IT specialists, doctors, influencers and other professionals in particular, who valued the ryczałt for its low tax rate, fixed health insurance contribution and simple revenue records.

The key elements of the planned reform comprise two fundamental changes. First, the revenue limit for eligibility for the ryczałt will be lowered from the current €2 million (approx. PLN 8.5 million) to just €250,000 (approx. PLN 1 million). Second, a higher 17% flat rate will be introduced on the portion of revenue exceeding €300,000 during the year.

According to data from the Ministry of Finance provided to Business Insider Polska, as many as 54,000 ryczałt taxpayers have revenue above PLN 1 million. These are the people who will not be able to choose the ryczałt in 2027 if their 2026 revenue exceeds the new limit. They will have to look for an alternative form of taxation - and each of them involves higher costs and more complicated filings.

Linear PIT - a simple alternative with hidden costs

The first and most commonly considered alternative is switching to the 19% flat-rate personal income tax (linear PIT). Compared with the PIT tax scale, where from 2027 the 32% rate will apply to income above PLN 150,000, the linear option is significantly more favourable for high earners. An additional advantage is the relatively low cost of bookkeeping and the fact that tax is calculated on income, not revenue.

However, linear PIT has significant drawbacks that are worth knowing before making a decision:

• Solidarity levy - on income above PLN 1 million the entrepreneur must pay an additional 4% (5% after the changes), which raises the effective rate to 23-24%. There was no such burden under the ryczałt.
• Health insurance contribution - it is 4.9% of actual income, which is a significant burden at high earnings.
• Full personal liability - as with a sole proprietorship (JDG), the business is you - you are liable with all of your assets.

Adding up the linear tax, the solidarity levy and the health insurance contribution, the total burden can reach as much as 28-30% of income. For an entrepreneur with income of PLN 10 million, the difference compared with the previous ryczałt will be noticeable and financially painful.

Limited liability company (sp. z o.o.) - a popular choice, but with pitfalls

The second alternative is to set up a limited liability company (sp. z o.o.). This option is attractive because of the shareholder's limited liability (in principle up to the amount of their contributions), the absence of the solidarity levy and the possibility of using the preferential 9% CIT rate for small taxpayers. A sp. z o.o. can be set up online with a minimum contribution of just PLN 5,000, and in some cases the shareholder can avoid the obligation to pay contributions to the Social Insurance Institution (ZUS).

However, you need to remember double taxation - tax is paid both by the company (9% or 19% CIT) and by the shareholder on the payment of a dividend (19% PIT). The effective tax rate is therefore 26.29%. Importantly, after converting a JDG into a sp. z o.o., the preferential 9% CIT rate is available only after the company has been operating for two years.

It is worth considering the Estonian CIT option, which can reduce the effective taxation to around 20%. However, this requires meeting additional formal conditions. You also should not forget the practical aspects of running a company - conversion costs can exceed PLN 10,000, accounting services become up to three times more expensive, and money cannot be freely withdrawn from the company account for private needs, as is the case with a sole proprietorship.

Limited partnership (spółka komandytowa) - the most interesting tax solution

The third alternative - and according to many experts the most favourable - is the limited partnership (spółka komandytowa). Although it is a CIT taxpayer and formally subject to double taxation (like a sp. z o.o.), it offers unique mechanisms that allow the effective tax rate to be reduced significantly.

Deduction mechanism for general partners

The key advantage is that the general partner (komplementariusz) can deduct the CIT paid by the partnership from their own PIT liability. In practice, this means that the effective tax rate on the profit generated can be reduced to a maximum of 19% - the same as under single taxation with linear tax, but without the solidarity levy.

Tax exemption for limited partners

Limited partners (komandytariusze) benefit from a partial exemption from tax on dividends. Half of the dividend paid (up to a maximum of PLN 60,000) is exempt from tax. With a dividend of PLN 120,000, the effective tax rate is just 9.5%. The excess above the exempt amount is subject to the 19% flat-rate tax on capital income.

The limited partnership is not free of drawbacks, however. Partners must pay full ZUS contributions and the health insurance contribution (although the latter is a fixed amount, which is a certain advantage). The costs of running the partnership are higher than for a JDG, and the structure itself requires careful legal and tax planning.

What to choose? Key decision factors

Choosing the right form of taxation after losing access to the ryczałt is not simple and depends on many individual factors. When making a decision, it is worth taking into account:

1. The level of revenue and income - the higher the income, the more advantageous the limited partnership becomes because of the absence of the solidarity levy.
2. The level of tax-deductible costs - if costs are minimal (as for many current ryczałt taxpayers), switching to tax on income will not bring significant savings.
3. The need for free access to funds - this is simplest in a JDG with linear PIT; in companies it requires additional procedures.
4. Readiness for higher service costs - companies generate significantly higher accounting and administrative costs.
5. The long-term perspective - converting into a company is a strategic decision, and reversing it can be costly.

One thing is certain - falling out of the ryczałt means higher tax burdens and more complicated filings, regardless of the alternative chosen. That is why it is so important to make the decision consciously and with sufficient lead time.

Don't wait until the last minute - plan the change now

The changes to the flat-rate tax on recorded revenue may come into force from 2027, but it is worth starting preparations much earlier. Converting the business, analysing tax structures and choosing the optimal solution takes time and professional legal and tax advice.

Contact our firm to carry out an individual analysis of your tax situation. We will help you choose the most favourable form of taxation, guide you through the conversion process and make sure the change is as smooth and safe as possible. The sooner you start planning, the more you will save - both money and stress.