Outsourcing Payroll
in Poland

The B2B model differs in that your team member, i.e. a contractor, is responsible for payroll and taxes. As a rule, personal taxes are levied on the income and are not mandatory for compensation by the company. Still, here’s the breakdown.

In Poland, personal income tax under the lump sum tax constitutes 12%. 

• Social Security contributions are normally equal to PLN 1,773.96 (~ $426.00) per month and are not paid during the first 6 months after registration as a PE.
  For the next 24 months, PEs can pay so-called ‘preferential contributions’ that are significantly lower than normal ones—PLN 442.90 (~ $109.00) per month.
• Health insurance contributions are calculated depending on income and range from $114.10 to $342.30 per month. 

As a result, the effective tax rate for an IT specialist with a monthly remuneration of $5,000 would amount to approximately 22.5% of their gross income (including  PIT and SSC obligations).

Poland offers tax relief for R&D, which allows for the deduction of 200% of R&D costs, including:

1. Employee remuneration and social security contributions, 
2. Purchase of materials and raw materials for R&D activity, 
3. Expert opinions, advisory services, and scientific research contracted from accredited institutions for the needs of R&D activities, 
4. Paid use of research equipment used only in the conducted R&D (excluding related entity agreements), 
5. Patent, IP protection costs, 
6. Depreciation of fixed/intangible assets (excluding passenger cars and buildings), 
7. Purchase of specialized R&D equipment (e.g., laboratory tools, measuring devices not classified as fixed assets), 
8. Services for using scientific research equipment.

Payroll outsourcing services in Poland cover key day-to-day tasks, such as:

• Payroll tax planning, calculation, and consultation
• Preparation and allocation of statements
• Preparation and submission of payroll returns to local authorities
• Statutory payroll reporting
• Team benefits administration
• Processing payments for the tech industry

• It saves costs & time. Managing payroll internally requires your accountants to cover salary calculations of both in-house and outsourced development teams. Extra workload means additional hiring and staff training, not to mention that your payroll experts would have to learn the specifics of the foreign payroll management rules, labor laws, statutory regulations, tax systems, etc., to stay compliant. Thus, outsourcing payroll solutions can help you cut costs on payroll management for new team members. Plus, it frees up time for your internal team to prioritize core financial activities.

• It mitigates compliance risks. When hiring developers abroad, your tech business should follow all the local laws, especially regarding payroll and taxes. Cooperation with a local payroll provider can shield your company from legal issues and fines, as they know the ins and outs of the local tax laws, wage regulations, terminations, and compliance requirements and stay updated on changes.

• It’s safe for your data. Payroll deals with sensitive employees’ information like social security numbers, salaries, and bank details, which can make tech entrepreneurs reluctant to use payroll outsourcing services in Poland. However, a trusted payroll firm prioritizes security, investing in cloud-based servers, data centers, and cyber security software. The result? Maximum protection from embezzlement, identity theft, and other risks.
• It allows for scalability. The tech companies looking to rapidly expand their development team abroad often have complex payroll needs. Using outsourced payroll services can help them handle fluctuations in employee numbers, benefit plans, and tax requirements, providing scalability without the need for extra internal resources or infrastructure. This approach has been embraced by notable tech companies like People.ai, BigCommerce, ThredUP, Sift, and Dotmatics when expanding development teams abroad.

• Qualification & experience. Choose a vendor with experienced payroll and legal professionals in the tech industry. Also, check out their case studies, client reviews, and testimonials for social security.
• Pricing structure. Consider a payroll outsourcing provider in Poland with predictable pricing and detailed invoices to avoid hidden fees and, therefore, eliminate the risk of overpayment. 
• Technology & security. Check if your payroll outsourcing company in Poland uses modern payroll processing software that is reliable and capable of handling your payroll requirements. Additionally, make sure they apply data security protocols and encryption standards and comply with data privacy regulations to safeguard employee information.
• Guarantees. If your payroll outsourcing solutions company provides compensation for mistakes or missed deadlines, has outlined timeframes, and offers pricing transparency, this is a green flag to outsource payroll service in Poland with them.

Employer of Record (EoR) allows tech businesses to employ talented in-country experts without setting up a legal entity and receive all the needed operational support in one place.

This is the most viable way to legally employ A-players for your global expansion plans for the following reasons:

• You delegate the management of all the business functions, like employment, payroll, tax payments, and compliance, and don’t have to establish a legal entity.
• It saves you the hassle of outsourcing these operations to multiple vendors.