The form of taxation determines how much income tax you pay on your business and how you account for costs. In a sole proprietorship this is not a once-and-for-all choice — it can be changed every year, but only within the statutory deadline and through the proper notification. Below we explain which forms you can choose from in 2026, by when you must make the change, how to report it and what to keep in mind before you decide.
Three forms of taxation to choose from
A person running a sole proprietorship can settle income tax in one of three ways. The tax scale is the basic form — the tax is 12% of income up to the threshold of PLN 120,000 and 32% on the amount above it, with a tax-free amount of PLN 30,000 taken into account. The flat tax means a single rate of 19% on income, regardless of its level, but without a tax-free amount and without the right to most family allowances. The lump-sum tax on recorded revenue (ryczałt) is calculated on revenue rather than income — costs are therefore not deducted, but the rates are lower and depend on the type of activity carried out.
Under the tax scale and the flat tax, the basis is income, that is revenue reduced by the costs of earning it. This solution favours firms that incur real, documented expenses. The lump-sum tax can be advantageous where there are few costs and revenue is relatively high. Each form also affects the amount of the health contribution differently, which is why the decision should not be based on the tax rate alone.
By when the form of taxation can be changed in 2026
There is one rule: the declaration on the choice or change of the form of taxation for a given year must be submitted by the 20th day of the month following the month in which the entrepreneur earned the first revenue in that tax year. In practice, most entrepreneurs earn their first revenue already in January, which is why for them the cut-off date is 20 February 2026.
If the first revenue of the year appears later, the deadline shifts accordingly — with a first revenue in June you have until 20 July to make the change. An exception is the situation in which you earn the first revenue of the year only in December — then the declaration can be submitted by the end of the tax year. The chosen form applies for the whole year and carries over to subsequent years until you report another change within the deadline.
How to report the change
The simplest route is to submit an application to change the entry in the CEIDG business register. In the CEIDG-1 application you indicate the chosen form of taxation, and the system passes this information on to the tax office. The application can be submitted online using a trusted profile (profil zaufany) or in person at the municipal or city office. The declaration can also be submitted directly in writing to the head of the tax office.
After submitting the application online, it is worth keeping the Official Confirmation of Receipt (UPO) as proof of meeting the deadline. What counts is the date of effective submission of the declaration, so it is best not to leave the formalities until the last day. If the change is to be linked to a change in the scope of activity, it is a good idea to check whether the chosen form is available for that activity at all.
What to consider before deciding
Before changing the form of taxation, estimate the expected revenue and costs for the coming year. With high, well-documented costs the tax scale or the flat tax are usually more favourable, because income is taxed. Where there are few costs and the margin is high, it is worth calculating the lump-sum tax — bearing in mind that its rate depends on the type of services or sales. The health contribution also matters, as it is calculated differently under each form and can noticeably change the overall burden.
The choice is also affected by allowances and the way the annual return is settled. The tax scale allows the use of the tax-free amount, joint settlement with a spouse or the child allowance, which are generally not available under the flat tax and the lump-sum tax. Some types of activity are also subject to statutory restrictions on the use of the lump-sum tax. It is worth calculating several variants on specific figures rather than going by the nominal rate alone.
Common doubts
Doubts most often concern whether a change mid-year is possible — as a rule it is not, because the form is chosen for the whole year and the deadline is counted from the first revenue. A common mistake is also the belief that failing to file a notification means switching to the previous form; in fact, the existing form is retained precisely when you do not submit a new declaration within the deadline. If you have already settled January under one form and submit a declaration on a different one before 20 February, the last effectively submitted declaration prevails.