Today, amid discussions about the possible introduction of VAT for Ukrainian sole proprietors with annual declared income exceeding UAH 1 million, many Ukrainians living in Poland are exploring the option of transitioning to JDG, the Polish counterpart of the Ukrainian sole proprietorship.
Comparison of Ukrainian FOP vs. Polish JDG
We have previously covered the types of taxes applicable to JDG in Poland. This time, we focus on the key differences between the Polish and Ukrainian sole proprietorship models. One option that attracts the most attention is the Ryczałt system, a simplified form of taxation.
Let’s explore whether it can serve as a practical and attractive alternative for Ukrainian sole proprietors.
Under the simplified taxation system in Poland, eight different income tax rates may apply, ranging from 2% to 17%, depending on the type of activity. If a business conducts multiple types of activities, different tax rates apply to the corresponding types of income. Each income stream must be settled through a separate payment. If an entrepreneur violates income-recording rules and it is impossible to determine which transaction should be taxed at which rate, the tax authority has the right to apply the maximum tax rate for the relevant type of activity to the entire turnover.
In addition, tax liability arises even when goods are shipped without prepayment, meaning before the business has actually received the funds.
As a result, entrepreneurs are required to maintain full accounting records, meaning before the business has actually received the funds. As a result, entrepreneurs are required to maintain full accounting records, retain all primary documents (pro forma invoices, invoices), and submit a consolidated income record on a monthly or quarterly basis. Ukrainian sole proprietors submit reporting of this level of detail only in the event of a tax audit.
At the same time, Poland offers mechanisms for reducing the taxable income of a JDG, including partial deduction of ZUS contributions, offsetting losses from previous years, or applying available tax reliefs.
At first glance, these differences compared to the highly convenient Ukrainian sole proprietorship model may seem minor. However, failure to comply with the rules can result in fines and higher tax rates on your income. This is why comparing the Ukrainian and Polish sole proprietorship systems clearly demonstrates how critical a correct approach to accounting is.
If you want to focus on your work while remaining confident that no important accounting aspects are overlooked, we recommend using the services of professional Polish accountants.
VAT rules for JDG
If a business operates solely within Poland, entrepreneurs must register for VAT once their turnover reaches PLN 240,000. Working with clients in the EU also requires obtaining a European VAT number and submitting the relevant VAT reporting. JDG entities operating under the simplified taxation system are no exception. This means that an entrepreneur must be able to verify the VAT status of their counterparties, correctly charge VAT on each transaction, and calculate the amount of tax payable.
If a VAT overpayment occurs, a refund request must be submitted to receive the funds to a bank account or the balance may be carried forward to subsequent reporting periods. For businesses engaged in B2C sales within the EU, there is an obligation to administer VAT through the One Stop Shop (OSS) system.
Therefore, while income accounting in Poland is relatively straightforward, despite differing from the rules applicable to sole proprietors in Ukraine, VAT accounting, especially when comparing the Ukrainian and Polish sole proprietorship models, requires significantly greater attention and, as a rule, the mandatory involvement of a professional accountant.
ZUS Contributions: the Polish equivalent of Ukrainian SSC (Unified Social Contribution)
The ZUS system in Poland operates on a principle similar to Ukraine’s Unified Social Contribution (SSC): an entrepreneur pays a single consolidated contribution, which is then distributed across several funds. This contribution includes pension insurance, disability insurance, health insurance, accident insurance, contributions to the Labour Fund, and voluntary sickness insurance.
Social contributions and health insurance are calculated under different rules.
Social contributions are paid as fixed amounts based on 60% of the average salary (the contribution base). They are calculated as the product of the rate for each contribution and the contribution base.
The contribution rates used for calculation are as follows:
- pension insurance: 19.52%
- disability insurance: 8.00%
- sickness insurance: 2.45%
- contributions to the Labour Fund and the Solidarity Fund: 2.45%
- accident insurance: from 0.67% to 3.33%, depending on the risk category
The health insurance contribution for entrepreneurs operating under the Ryczałt system is calculated based on income level, with three separate thresholds in place.
For entrepreneurs using other taxation systems, different rules apply:
- under the general taxation regime, the contribution amounts to 9% of profit
- under the linear taxation regime, it amounts to 4.9% of profit
Annual Income | Ryczałt Rate | Formula |
up to 60 000 PLN | 9% | 9% × 60% of the average salary |
60 000 – 300 000 PLN | 9% | 9% × 100% of the average salary |
over 300 000 PLN | 9% | 9% × 180% of the average salary |
Poland also offers various contribution reliefs for new entrepreneurs during the first 2.5 years of business activity. As a result, the exact amount payable must always be calculated individually and depends on the specific circumstances of each case.
Ukrainian sole proprietors pay a Unified Social Contribution equal to 22% of the minimum wage. For 2026, the contribution is set at UAH 5,707.02 per quarter for Group 3 and UAH 1,902.34 per month for Group 2. In contrast, in Poland, with an income of PLN 10,000, an entrepreneur will pay almost the same 22%, but calculated on the entire actual income rather than on a fixed base. This significantly changes the financial burden, especially when comparing the Ukrainian and Polish sole proprietorship models.
For convenient management of contributions, benefits, and documentation, entrepreneurs have access to PUE ZUS (Platforma Usług Elektronicznych ZUS), the official online portal of Poland’s social security institution.
In summary, it can be said that the Ukrainian sole proprietorship model offers significant advantages not only in terms of simpler accounting and a lower tax burden, but also through reduced social contribution obligations. However, JDG can serve as a suitable alternative if you have changed your country of permanent residence and are considering options for legalizing your income in Poland. At the same time, it is important to keep in mind that engaging a professional accountant, at least during the first few months of activity, is highly advisable, as this helps avoid critical mistakes during the most sensitive stage of business development.
Our team is ready to support you with taxation matters and the registration of matters and the registration of sole proprietorships (JDG). We are available Monday to Friday, from 9:00 a.m. to 7:00 p.m. To book a consultation, please submit a request via the website form or contact us through one of the available messaging platforms.
