Polish Workers Shift to Self-Employment to Avoid Higher Tax Brackets
As wage growth pushes more Poles into the higher tax bracket, an increasing number of employees are legally switching to self-employment to minimize their income tax and social security...
As wage growth pushes more Poles into the higher tax bracket, an increasing number of employees are legally switching to self-employment to minimize their income tax and social security contributions.
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Escaping the Higher Tax Threshold
A growing number of employees are finding that rising wages lead to the second tax bracket, creating a significant financial burden. To avoid higher taxes, many are opting to switch from standard employment contracts to sole proprietorships, a legal maneuver that is rapidly gaining popularity.
This trend is driven by the fact that the second tax bracket threshold of 120,000 PLN has remained unchanged since 2022. Despite high inflation and rising salaries, the threshold has not been adjusted, pushing approximately 2.4 million taxpayers into the higher bracket in 2025, compared to 800,000 three years prior.
The Rise of Pseudo-Self-Employment
Data from Statistics Poland (GUS) reveals a sharp increase in self-employment. By the fourth quarter of 2025, the number of individuals meeting the criteria for “fictitious” self-employment exceeded 509,000.
This figure represents nearly one-fifth of all sole proprietorships without employees. The scale of this shift is massive, with cases increasing more than fourfold in just five years, rising from approximately 116,000 in 2020.
High-Income Sectors Lead the Shift
The transition is most prevalent in high-paying sectors, particularly in IT, professional services, and healthcare. According to the Polish Economic Institute, these industries offer the greatest potential for reducing tax and social insurance burdens through B2B contracts.
Experts warn that current regulations inadvertently encourage both workers and employers to adopt the B2B model. While the duties performed remain identical to previous roles, the change in employment status significantly impacts state budget revenues and creates disparities within the labor market.
Proposed Solutions for Tax Reform
Experts suggest two primary directions to address this phenomenon. The first involves raising the tax threshold and introducing a more extensive tax progression for top earners.
The second approach focuses on tightening existing regulations. This would involve more effective oversight and strict enforcement of labor laws to ensure that fictitious self-employment is no longer a viable method for avoiding higher tax liabilities.