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In Poland you pay 12% revenue tax or 19% linear income tax + lowered social security. A lot of developers don't even consider companies which don't have arrange

In Poland you pay 12% revenue tax or 19% linear income tax + lowered social security. A lot of developers don't even consider companies which don't have arrangements like this because the difference is so high. A no-name company which allows B2B can outbid Google (which pays like shit in Warsaw anyway).

codethief 3y ago
Ok, so you're a contractor and set up some LLC or something (which pays 12% on its profits) but then you (the company) pay yourself (the person) a salary on a regular basis. Won't you still need to pay personal income tax on that income? Or did you mean to say that you (the person) only receive money from your LLC in the form of yearly dividends? In this case, however, it'd be 12% taxes at the LLC level + whatever the Polish tax rate is on capital gains.
- isbvhodnvemrwvn 3y ago
  It's a one person company, it doesn't have legal personhood. You are the company in that sense, you don't need to employ yourself, but there is no distinction between what company owns and what you do (sort of), so you have unlimited personal financial liability.
  - codethief 3y ago
    I see. I'm surprised to hear that this makes such a difference in Poland. In Germany your taxes in this case will be exactly the same.
- necovek 3y ago
  Incorporating gives you a lot of options: pay eg. only 25% of your gross income as salary, the rest at the end of the year either as a bonus or as dividends. If there is a social security cap, it may even be beneficial to pay yourself out 25% first and second month and then 250% the third, depending on actual rates (social security contribution cap and progressive income rates). So in general, an LLC allows you a lot more flexibility to adapt to tax rules. However, social security caps used to be much lower for self-employment or single-person entreprenuerships in some countries, which resulted in local companies asking de-facto employees to set up self-employment single-person businesses, and pretend to have a b2b relationship, with no employee protections and smaller taxes.

codethief 3y ago

Ok, so you're a contractor and set up some LLC or something (which pays 12% on its profits) but then you (the company) pay yourself (the person) a salary on a regular basis. Won't you still need to pay personal income tax on that income? Or did you mean to say that you (the person) only receive money from your LLC in the form of yearly dividends? In this case, however, it'd be 12% taxes at the LLC level + whatever the Polish tax rate is on capital gains.

isbvhodnvemrwvn 3y ago
It's a one person company, it doesn't have legal personhood. You are the company in that sense, you don't need to employ yourself, but there is no distinction between what company owns and what you do (sort of), so you have unlimited personal financial liability.
- codethief 3y ago
  I see. I'm surprised to hear that this makes such a difference in Poland. In Germany your taxes in this case will be exactly the same.
necovek 3y ago
Incorporating gives you a lot of options: pay eg. only 25% of your gross income as salary, the rest at the end of the year either as a bonus or as dividends. If there is a social security cap, it may even be beneficial to pay yourself out 25% first and second month and then 250% the third, depending on actual rates (social security contribution cap and progressive income rates). So in general, an LLC allows you a lot more flexibility to adapt to tax rules. However, social security caps used to be much lower for self-employment or single-person entreprenuerships in some countries, which resulted in local companies asking de-facto employees to set up self-employment single-person businesses, and pretend to have a b2b relationship, with no employee protections and smaller taxes.