Under the Entrepreneurs’ Law, a taxpayer does not have to register their business if the monthly income from it is less than 75% of the minimum wage. In 2024, this limit will be doubled.
Unregistered business activity is beneficial for the taxpayer as it involves a minimal amount of formalities and there is no obligation to pay social security contributions. It is subject to taxation and accounted for in the annual declaration according to the tax scale. In case a taxpayer only earns income from an unregistered business, they would pay no tax in 2023 as the tax-free amount currently stands at 30 thousand zł.
In 2024, the minimum salary will increase twice; the first increase slated for January to 4,242 zł and the second from the 1st of July to 4,300 zł. This means that for the first half of the year, the monthly income from unregistered activity cannot exceed 3,181.15 zł. In the second half of the year, it must not exceed 3,225 zł per month. As a result, next year, it will be possible to earn up to 38.4 thousand zł without registering a business. However, it’s important to remember the monthly limits, which may be a barrier to conducting such a business.
In the Sejm (Poland’s lower house of parliament), there is a draft proposal to change the limit of 75% of the minimum monthly wage to an annual limit equivalent to nine times the minimum salary. This is equivalent to twelve times the minimum wage and a coefficient of 75%.
The proposed change aims to introduce an annual, not monthly, income amount up to which it is possible to run a so-called unregistered business. Such a change would be beneficial for taxpayers. Imagine a person who produces goods over a long period and then sells them over a short period. As a result, under current regulations, they may exceed the monthly limit. However, if this limit was computed annually, it would not be exceeded. This change would certainly boost the economic activity of many people engaged in small income-generating activities.
Piotr Juszczyk, Chief Tax Advisor at inFakt Company
