In recent years, the information technology market has been rapidly developing both in Belarus and Poland, attracting the attention of entrepreneurs and investors from all over the world. Individual entrepreneurs play a key role in this dynamic sector because they become the engines of innovation and the services offered. Despite the similarities in technology development and the growing interest in startups, the working conditions and support for individual entrepreneurs in these two countries differ significantly. In this article, we will conduct a comparative analysis of individual entrepreneurs in the IT sector of Belarus and Poland, identifying the advantages and disadvantages of each country, as well as trends that shape the business environment. We will look at the issues of registration and conduct of business and tax policy that affect the success of individual entrepreneurs in both countries. Having familiarized with these aspects, readers will be able to better understand where and how to develop their IT business, taking into account the unique characteristics of each country.
Who is an Individual Entrepreneur
An individual entrepreneur is a form of running a small business when one person runs the business. Sometimes, it may involve several employees and persons under civil law contracts.
In Belarus and Poland, citizens of these countries and foreigners who have a residence permit (in Poland, also a Pole’s card) can register as Individual entrepreneurs.
Let’s consider the specifics of doing business in the IT sector in Belarus and Poland.
Features of the Business of Individual Entrepreneurs in IT in Belarus
The Possibility of Hiring Employees
Usually, in Belarus, an individual entrepreneur in the IT sector independently performs work (provides services). Despite this, he has the right to hire no more than three people under labour and civil law contracts. In this case, the individual entrepreneur is responsible for all “salary” taxes on the staff involved, vacation registration, sick leave documents, and reports to the Belgosstrakh and the Social Protection Fund.
Types of IT Activities
In Belarus, individual entrepreneurs can operate only from a certain government-approved list. Several types of activities are suitable for the IT sector from the List:
- Computer programming, consulting and related services.
- Other data processing, information placement services on the Internet (provision of space and time for advertising, except for advertising in the media on the Internet) and related activities.
Additional Conditions
1. State Registration
State registration is a straightforward process, typically taking no more than a day. Individual entrepreneurs are accepted for tax registration within two working days after the tax office at the individual entrepreneurs’s residence receives information about the individual entrepreneurs’s state registration from the registering authority.
An individual entrepreneur submits documents for state registration in person or online. To submit documents through the electronic state registration web portal, you need to have an electronic digital signature key. Such a key can be purchased at the Republican Unitary Enterprise “National Center for Electronic Services”. Those who independently pay mandatory insurance premiums, not being individual entrepreneurs, have the opportunity to buy an individual’s key. To date, mobile EDS (on a smartphone SIM card) is not used for public services for the registration of individual entrepreneurs. That is, the service for electronic state registration of individual entrepreneurs is not available to everyone today.
2. Bookkeeping
In Belarus, individual entrepreneurs do not keep classical accounting records but are required to keep records of income and expenses.
3. Access to the International Market
Belarusian individual entrepreneurs in the IT sector have no restrictions on working with non-residents of Belarus. However, due to the sanctions regime, it may be difficult to receive payments from non-residents, although a number of Belarusian banks already work with them. It is also possible to receive payments using payment systems and in cash.
4. Remote Work
The IT sector assumes the ability to provide services and perform work remotely. However, suppose an individual entrepreneur is absent from Belarus for more than 183 days in a calendar year. In that case, he will need a certificate of withholding taxes from his income in another state to offset this amount against taxes in Belarus.
5. Licensing
It is not necessary to license individual entrepreneurs’ activities in Belarus’s IT sector.
Features of the Business of Individual Entrepreneurs in IT in Poland
The Possibility of Hiring Employees
Individual entrepreneurs who are registered in Poland have the right to hire employees. It allows you to expand the scale of your business by attracting specialists to perform various tasks. The conclusion of an employment contract, a work contract (umowa zlecenia) or a contract for the performance of certain work (umowa o dzieło) depends on the nature of the cooperation and the chosen form of employment. However, the entrepreneur is responsible for compliance with labour laws, including providing social insurance (ZUS) and other mandatory deductions for hired employees.
Types of IT Activities
Individual entrepreneurs in Poland have many opportunities to work in the IT field. They can perform the following activities:
- Software development (including web applications, mobile applications, enterprise systems).
- Support and administration of IT systems, including database management and cloud platforms.
- Consulting in the field of IT related to developing and implementing digital solutions for business.
- Creation and design of websites.
- Cybersecurity: auditing, data protection, and configuring security systems.
- IT training: conducting courses and seminars on programming, administration and other IT skills.
- Outsourcing of IT services: executing contracts with foreign companies to provide various services, such as software development or technical support.
Additional Features
1. Simplified Registration
Registering an individual entrepreneur in Poland is simple; you can register an entrepreneur online. After registration, an entrepreneur can immediately start his business.
2. Mandatory Accounting
Even if the sole proprietor has a small volume of transactions, keeping records of income and expenses is mandatory. To do this, you can use the services of professional accountants or specialized software solutions.
3. Access to the International Market
An individual entrepreneur in Poland can provide services throughout the European Union, opening up wide international cooperation opportunities.
4. Remote Work
IT activities often do not require an entrepreneur’s physical presence in Poland. Many individual entrepreneurs work with clients around the world using electronic signatures, billing services, and remote contracts.
5. Licensing
Most IT activities in Poland do not require special licenses or permits, simplifying the business process.
These features attract IT specialists who wish to work as individual entrepreneurs to Poland.
Peculiarities of Taxation of Individual Entrepreneurs in the IT Sector in Poland
In Poland, individual entrepreneurs (jednoosobowa działalność gospodarcza) in the IT sector can pay taxes depending on the chosen form of taxation. The main payments are as follows:
Income Tax (PIT)
Individual entrepreneurs choose one of the following tax systems:
Option 1. The progressive scale of taxation
17% – on incomes up to 120,000 zlotys (approximately 27,695.40 euros) per year.
32% – on incomes over 120,000 zlotys per year.
Standard deduction (tax threshold) — tax is not charged for 30,000 zlotys (approximately 6923.85 euros).
It is advantageous to use it at low incomes or high expenses.
Option 2. Single rate (19%)
The rate is fixed, regardless of the amount of income.
It is suitable for high-income people, as it excludes progressive rate increases.
Option 3. Taxation based on a fixed rate
In the IT sector, the tax rate is 12% of income (in some cases, it can be reduced to 8.5%, for example, for programmers).
Expenses are not taken into account in this case.
Social Сontributions (ZUS)
Individual entrepreneurs are required to pay social contributions, which include:
- The pension contribution is about 19.52%.
- The medical contribution is 4.9% (for linear taxation) or 9% (for progressive scale).
With a fixed income tax rate, the medical contribution rate is fixed and depends on the income level.
For the first 6 months, new шndividual entrepreneurs can take advantage of a zero social contribution and a reduced rate for 24 months.
Value Added Tax (VAT)
The rate is 23% for most IT services.
Individual entrepreneurs must register as VAT payers if their annual income exceeds 200,000 zlotys (approximately 46,159 euros).
Peculiarities of Taxation of Individual Entrepreneurs in the IT Sector in Belarus
It should be noted that in Belarus, unlike Poland, there is a special legal regime—a High-tech Park. Individual entrepreneurs who have become residents of the Park receive various benefits. In particular, they do not pay value-added tax on transactions with non-residents of Belarus (they apply a preferential rate of 0%).
Income Tax
In Belarus, there are no taxation features for individual entrepreneurs working in information technology (IT), except for one thing: they cannot apply a single tax.
Individual entrepreneurs must pay income tax every quarter at a rate of 20%. If their income in the current year exceeds 500,000 Belarusian rubles (approximately 86793 euros), then the tax for the year is recalculated using an increased rate of 30%.
Social Insurance Contributions
Individual entrepreneurs make mandatory contributions to social insurance, including pension contributions. In total, they amount to 35% of income. They can be paid both monthly and in a lump sum for a whole year no later than March 1 of the following year (considering the country’s minimum wages) or only for periods when the activity was carried out. Individual entrepreneurs have the opportunity not to pay social contributions in the following cases:
- If they are retired and receive pensions.
- If they are on parental leave before the age of three.
- If they are full-time students.
“Salary taxes”
Suppose an individual entrepreneur has employees or employs performers under a civil contract. In that case, he is obliged to pay income tax on their income at a rate of 13%, contributions to the Social Protection Fund as a whole 34% and insurance premiums in the Belgosstrakh at a rate of 0.6%.
Conclusion
As you can see, there are differences in the conduct of individual entrepreneur activities in the IT sector in Belarus and Poland and in taxation. Here are some of the differences:
- There is no special legal regime, like the Hi-Tech Park in Belarus, in Poland, but there are tax benefits for individual entrepreneurs in the IT sector.
- In Poland, individual entrepreneurs in the IT sector can hire employees, the number of which depends on the volume of business and revenue. In Belarus, all individual entrepreneurs can hire and attract no more than three employees under civil law contracts.
- Unlike individual entrepreneurs in Poland, there is no need to keep accounting records for individual entrepreneurs in Belarus.
- Taxation for individual entrepreneurs in the IT sector in Poland may be more profitable (if income tax is applied at the rate of 8.5%). Belarus’s income tax rate for all individual entrepreneurs is 20%. At the same time, individual entrepreneurs generally do not pay VAT on transactions in Belarus, whereas in Poland, in some cases, VAT must be paid (with high income).
- Also, in general, social contributions in Poland can amount to about 25% of the income of individual entrepreneurs, whereas in Belarus, they are 35%. Since the social security systems in Belarus and Poland differ, it is difficult to say how this affects the business environment.
Thus, the choice between Belarus and Poland for doing business in the IT sector depends on the entrepreneur’s strategic goals, preferences, and willingness to meet certain conditions. The Belarusian jurisdiction may be attractive for those who are focused on the local market or do not have the opportunity to work for other jurisdictions. Poland, in turn, is better suited for those who seek long-term stability and development in the international arena.
How to contact us
For more information or advice on issues related to IT business development in Poland and Belarus, do not hesitate to contact us. We are here to help and support you.
Phone and email communication options are available for your convenience:
- +375293664477 (WhatsApp/Telegram/Viber);
- info@spex.by.
