Five steps to become a B2B contractor in the Polish IT sector (Update: 2024)

Steps:

1. Understand the B2B Contractor Model
2. Register Your Business with CEIDG
3. Set Up Your Taxes and Accounting
4. Review and Negotiate Your Contract
5. Start Working as a B2B Contractor

1. Understand the B2B Contractor Model in Poland

Before becoming a B2B contractor in Poland, it’s crucial to understand what this model entails and ensure it aligns with your goals and preferences.

A B2B (Business-to-Business) contract is an agreement between you, a self-employed individual or sole proprietorship, and the company that would typically be your employer. Unlike a traditional employment contract, a B2B contract doesn’t make you an employee but an independent contractor.

Key advantages of the B2B model include:

• Higher earning potential: Since the company doesn’t have to cover additional costs like employer contributions and social security, you can often negotiate a higher net remuneration.
• Flexibility: B2B contracts offer more flexibility regarding working hours and location.

However, it’s essential to weigh these advantages against potential drawbacks:

• Lack of employment benefits: You won’t receive paid time off, sick leave, or other standard employee benefits.
• Tax and insurance obligations: You’ll be responsible for paying your taxes, social security contributions, and health insurance.
• Job security: B2B contracts can generally be terminated more easily than employment contracts.

Additionally, employment misclassification is risky if your working relationship is deemed too similar to traditional employment. Polish authorities may reclassify you as an employee, leading to penalties for the company and potential tax obligations for you.

When you are on a B2B contract, your employer will not fulfil your tax and insurance obligations, meaning you will have to take care of them yourself or use an accountant to do this for you.

In instances where utilising B2B contracts is impractical due to factors like residency and work permit requirements, security concerns, or corporate policies, employers who need a legal entity in Poland can find a viable alternative through an Employer of Record (EOR) solution.

2. Register Your Business with CEIDG

To legally operate as a B2B contractor in Poland, you must register your business with the Central Register and Information on Economic Activity (CEIDG). This process involves submitting the CEIDG-1 form, which can be completed online, in person, or by mail.

Here are the key steps to register with CEIDG:

1. Prepare the required information, including your details, business name (which must include your name and surname), business activity codes (PKD codes), taxation form, and other relevant information.
2. Complete the CEIDG-1 form online at Biznes.gov.pl, at a local office, or by downloading and printing the form.
3. Submit the form and any additional documents like a ZUS insurance application or VAT registration (if applicable).
4. Wait for your registration to be processed, which typically takes one business day.

You’ll also receive your Tax Identification Number (NIP) and Business Statistical Number (REGON) during registration.

3. Set Up Your Taxes and Accounting

As a B2B contractor, you’ll handle your taxes, social security contributions, and accounting. Here are the key steps:

Taxes

1. Choose your taxation form during CEIDG registration. Options include:
   • General principles (progressive tax rates of 17% and 32%)
   • A flat tax rate of 19%
   • Lump-sum tax on registered revenue (rates vary by business activity)
2. Register for VAT if your annual sales exceed PLN 200,000 or if you don’t solely provide VAT-exempt goods/services. The VAT-R form is used for registration. It must be submitted by the day before the sale of goods or supply of services subject to VAT commences.

Social Security Contributions

1. Register with ZUS (Social Insurance Institution) within seven days of starting your business.
2. Determine your contribution rates, which may be reduced for the first 2.5 years as a new business (“Ulga na start” relief).
3. Pay contributions by the 10th of each month.

Accounting

1. Choose an accounting method: simplified (revenue and expense ledger) or full accounting books.
2. Maintain thorough records of invoices, bills, and transactions.
3. Consider hiring an accounting firm to assist with bookkeeping and tax compliance.

4. Review and Negotiate Your Contract

Since Polish labour laws don’t govern a B2B contract, it’s crucial to review and negotiate its terms to protect your interests carefully:

• Remuneration: Negotiate a higher rate to compensate for the lack of employment benefits.
• Working conditions: Ensure provisions for flexibility, time off, sick leave, etc.
• Termination clauses: Understand the conditions for contract termination by either party.
• Non-compete clauses: Negotiate compensation for any non-compete obligations.
• Liability: Review liability limits and potential penalties or fines.

Remember, while the contract should provide some employment-like benefits, Polish authorities may scrutinise agreements that too closely resemble traditional employment relationships.

5. Start Working as a B2B Contractor in Poland

Once you’ve completed the registration process, set up your taxes and accounting, and negotiated a favourable contract, you can begin working as a B2B contractor in Poland.

Some final tips for a successful B2B experience:

• Stay compliant with tax, social security, and accounting obligations.
  • Pay social security contributions (ZUS) by the 10th day of each month;
  • Pay income tax by the 20th day of each month;
  • Pay VAT by the 25th day of each month if you decide to be a VAT payer;
• Build a professional network and continuously develop your skills.
• Maintain work-life balance by setting boundaries and taking advantage of your flexibility.
• Keep accurate records of your income, expenses, and client work.
• Consider forming a company if your business grows and needs a more formal structure.

The B2B contractor model in Poland’s IT sector offers unique opportunities for skilled professionals seeking higher earnings and increased flexibility. You can successfully navigate this path as an independent contractor by understanding the pros and cons, fulfilling legal requirements, and negotiating favourable terms.

5^1/2. Use our B2B-contract template and adapt it to your needs