B2B contracts vs employment contracts in Poland – tax implications

Although both models operate at the same time in business practice, their legal and tax consequences are significantly different. In practice, the decision about the form of cooperation is more often based not only on the type of work performed, but also on the level of public charges and the acceptable level of regulatory risk.

An employment contract is based on the concept of employee subordination. This means that the employee works under the employer’s supervision, in the place and at the time indicated by the employer. The employer acts as a payer of personal income tax and social and health insurance contributions. The salary is taxed according to the progressive tax scale: 12% up to PLN 120,000 per year, and 32% above this amount. Tax-deductible costs are fixed and usually do not reflect the real expenses connected with the work.

A B2B contract operates under a different legal regime. It is a civil law agreement concluded between two entrepreneurs, without subordination in the meaning of labour law. The person providing services runs a business activity and settles income tax independently, choosing one of the available forms of taxation. It is possible to include real business costs, depreciate fixed assets and use tax preferences such as IP Box, if legal conditions are met. In this model, it is also possible to choose a relatively low tax rate, even 8.5% in some cases.

The differences are especially visible in the area of social security contributions. In the case of an employment contract, the total employment cost is much higher than the employee’s net salary, because it includes contributions paid by both the employee and the employer. In the B2B model, the entrepreneur pays contributions independently, and their amount depends on the chosen taxation method and the stage of the business. For many companies, this is an important economic factor.

From the perspective of the company using the services, the difference is not limited only to costs. An employment contract includes obligations such as paid leave, protection during sickness, and specific rules for terminating the contract. A B2B contract provides more flexibility, but it requires careful drafting of the agreement and proper execution in practice to reduce the risk of reclassification.

In general, changing from an employment contract to a B2B model is economically justified mainly when the monthly net income exceeds approximately PLN 6,000. At lower income levels, the financial benefits often do not compensate for the increased tax and regulatory risk. The differences between these two models concern not only the level of net remuneration, but also the whole legal structure of the relationship, the scope of responsibility of the parties, and the method of taxation. In a situation of increasing activity of tax authorities, the correct qualification of the cooperation model becomes an important element of strategic legal and tax risk management.

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Anita Tulak is a graduate of the Faculty of Law and Administration and a tax advisor at the National Chamber of Tax Advisors. She has passed through all levels of career in accounting and tax law, from assistant to partner of a law firm and worked for recognised private consulting firms and the “Big Four” company PwC.