How to Accept International Payments as a Contractor in Poland?
Poland has emerged as a sought-after outsourcing destination for foreign companies in recent years. This is particularly true for hiring remote software developers and IT specialists, where the country ranks among the top places in all of Europe. So, if you want to work as an independent contractor for an international company, this guide is for you. It will give you an overview of what it means to be an independent contractor, its tax implications, and the different ways you can receive overseas payments.
Who is an independent contractor?
An independent contractor is a self-employed person offering expert services to clients on a contract basis. They do not receive any benefits from their clients and are responsible for filing their taxes.
Independent contractors can work with as many clients as they like. They are in complete control of their work schedule.
In Poland, most contractors prefer to work as self-employed professionals or sole proprietors. This is because this method offers higher net retention while requiring minimal administrative work. Generally, when working as a self-employed professional, the net retention rates range between 71% and 74%.
Keep in mind if you have a one-person business and your income is less than half of the minimum wage during the year, you are not required to register the business.
How to register your sole proprietorship in Poland?
Fill out the CEIDG-1 Form
You must begin by filling out the CEIDG-1 form. This form will register your business in Poland's Central Register and Information on Economic Activity. You can submit the form online, in person, or via registered mail; it is free of cost. Just make sure that you sign the form before submission.
Your application for business registration must contain:
- Entrepreneur specifications and PESEL number (if applicable)
- Date of birth
- Citizenship
- Place of residence or business address
- NIP number and REGON number (if applicable)
- Business name (containing at least your name and surname)
- Business activity code as per the Polish Classification of Activities (PKD)
- Date of starting the business
- Income tax payment form
- Contact details
Along with the CEIDG form, you should submit a declaration about the absence of judgments with a prohibition on practicing a specific profession, a prohibition on the operation of economic activity, and a prohibition on the operation of any activity connected with education, upbringing, treatment, or care of minors.
You must also register for a VAT number if your business is expected to generate more than PLN 200,000/year. You can register here.
REGON and NIP Numbers in Poland
REGON is the Polish National Business Registry Number. It groups the business' information such as the owner's name, owner's PESEL, company name, etc.
Any entity, including an individual entrepreneur doing business in Poland, is required to be registered in the REGON registry. For sole proprietors, they receive the REGON number when registering with CEIDG.
NIP (Tax Identification Number) is a 10-digit number to identify entities that pay taxes in Poland. It is automatically assigned upon registering the business.
Taxation for independent contractors in Poland
In Poland, there is a flat 19% tax for individual entrepreneurs. This tax system includes no personal allowances and tax credits, except credits for the mandatory health insurance contribution.
Alternatively, contractors may choose tax under general rules. This is progressive taxation with two tax rates, depending on the contractor's annual income:
- Revenue up to PLN 85,528.00 – 17% tax rate.
- Revenue above PLN 85,528.00 – 32% tax rate.
The due date for filing tax returns is due April 30 of the year following the reference tax year.
Once you start working as an independent contractor, the next thing you would have to figure out is the best way for you to receive international payments. Here are the most popular forms of payment used and accepted in Poland per its Labor Act.
How to receive international payments in Poland?
Check or money order
Checks or money orders are possible options for your clients, but they can take a long time to reach you. In some cases, they may even get lost along the way.
Cryptocurrencies
The popularity of cryptocurrency as a payment method has been rapidly growing in the last few years, and Poland has no law barring this kind of exchange. So, if your client has a crypto setup, you can receive your pay through Bitcoin, Ethereum, Dogecoin, or others.
The income tax on cryptocurrency should also be kept in mind. Some assume that crypto income is outside traditional payment methods and is thus non-taxable. But this is not the case. Crypto income is just another form of income, and you have to pay taxes on it like you would on any other income.
Wise
Wise is possibly the least expensive method to receive money in Poland, with the payment hitting your account within two days. It involves low risk, is easy to use, and offers a competitive exchange rate.
Wise accepts debit and credit cards. It will charge your client a flat fee rate of $6.13 and 2.31% of the amount being sent to you. It has a low remittance cost of $0.51.
If your client uses Wise Batch Payment to pay you, keep in mind that you will not be able to track the transfer status.
Ria
Ria is a simple to use payment method through which you will receive funds within three days. It also provides excellent customer service.
Your client will be charged a $5 fee when they pay you using a bank account. If they pay through a credit card, they will be charged a fee close to $35. Ria is safe and provides one month of free debit card transfers.
Remember, Ria does an extensive security check that can take up to a month. So if you want to receive funds quickly, Ria may not be the best choice.
Western Union
Another popular way to receive payments in Poland is using Western Union. With Western Union, you will usually receive the payments within minutes or a few days at the most. Also, its in-country agents make cash pickups convenient.
Your client may prefer using this service as it offers a price estimator tool that helps them calculate remittance fees beforehand.
Azimo
Azimo provides one-hour payment delivery in more than 80 countries.
For your client, the remittance cost will depend on the amount being sent; however, Azimo claims that it charges 90% less remittance fees as compared to other similar services.
The service provider uses encryption technology and has an anti-fraud policy, which more than a million customers trust.
Remitly
Remitly is a safe and cost-effective way for you to receive payments in Poland. Its transfer service deposits the pay within 3 to 5 days, while its express service provides instant delivery.
For your client, transfers below $1000 will be charged a $3.99 fee. Payments made through cards will attract a 3% remittance fee.
Xoom
Xoom, which is owned by Paypal, is a user-friendly service that usually delivers payments within 1 to 2 days.
It offers free of cost transfers over $1000 if your client uses banks as the sending medium. Its remittance cost is also relatively low.
Paysend
Paysend is a popular method for receiving money in Poland where your payment is directly transferred to your MasterCard within minutes. The transaction will cost your client only €1.5.
Parting thoughts
We hope this article helps you to decide the best way to receive payments from your overseas clients. However, if you are interested in working for a reputed company instead of dealing with the uncertainty in a freelance career, look no further.
We at Starkflow, work as an employer of record (EOR) and can help you get a remote job at reputed companies around the world. As an EOR and legal employer, we ensure that our employees are comfortable with their work agreement and have a quick, transparent onboarding. We offer them excellent benefits and a reliable employment contract compliant with local regulations. We also always pay the agreed monthly salary on time.
Contact us now!
