Lump-Sum Tax With an Employee in Poland

Hiring an employee through a sole proprietorship on lump-sum tax in Poland in 2026. Why salary and employer contributions do not reduce the lump-sum tax base and how to compare tax forms.

You can hire employees while using lump-sum tax, but employment costs do not reduce revenue subject to lump-sum tax. Gross salary, employer-funded contributions, PPK and other employment costs are real business expenses, but they are not tax-deductible costs in the lump-sum tax calculation.

What the employer pays

Under an employment contract, the business owner finances, among other things:

gross salary,
their share of pension and disability contributions,
accident insurance contribution,
the Labour Fund and FGŚP, where applicable,
the employer's PPK contribution, if the employee participates in the scheme.

The health contribution and part of the employee's social insurance contributions are withheld from their salary. They are not an additional cost on top of gross salary.

Why employee costs do not reduce lump-sum tax

Lump-sum tax is calculated on revenue after the deductions specified by law. Ordinary business costs — including salaries and contributions financed for employees — are not among those deductions.

Permitted deductions may include the business owner's own social insurance contributions, 50% of their paid health contribution, IKZE and selected tax reliefs. This does not create a right to deduct payroll costs.

Example

Assume:

business revenue: 200 000 zł,
lump-sum tax rate: 8,5%,
annual employee cost: 72 288 zł.

Before the business owner's own deductions, the tax is:

200 000 zł × 8,5% = 17 000 zł

The employee cost does not change the tax base to 127 712 zł. It does, however, affect cash flow and the actual profitability of the business.

Lump-sum tax or income tax

When employing people, it is worth comparing at least:

lump-sum tax calculated on total revenue,
19% flat tax on income,
the 12%/32% tax scale on income, with the tax-free amount and available reliefs,
the health contribution applicable to each form.

The greater the share of salaries and other costs in revenue, the more often an income-based form may work out better. This is not an automatic rule, however — the result depends on the lump-sum rate, margin and other income.

PPK and payer obligations

Hiring may involve obligations related to:

registration with ZUS,
monthly documents and payments,
the employee's PIT advances,
PPK,
personnel records and occupational health and safety.

The basic employer contribution to PPK is 1,5% of the participant's remuneration. PPK does not depend on the former threshold of 20 employees; the details depend on the status of the entity and the person employed.

FAQ

Is an employee's salary deducted from revenue under lump-sum tax?

No. It is a business expense, but it does not reduce the lump-sum tax base.

Do employer contributions for an employee reduce lump-sum tax?

No. They should not be confused with the business owner's own social insurance contributions, which may be deducted under separate rules.

Can lump-sum tax with an employee be worthwhile?

Yes, but tax and profitability must be calculated without reducing revenue by the employment cost.

Sources

Need to calculate employment costs?

Oxyok provides accounting for sole proprietorships with employees — from 49 zł + VAT per month.

Email Paweł or see Oxyok accounting.

This material is general in nature. The comparison should account for the lump-sum rate, all costs and the health contribution.