Updated: 20.11.2024
The Polish job market offers various types of contracts that can serve as a foundation for employment. In certain industries, there’s a growing trend towards collaboration through B2B (short for „business to business”) contract. As an example, we can point to the IT sector, where cooperation on the basis of B2B contract is becoming more and more popular.
This article aims to give overview of B2B contract in Poland and explore the significance of this type of collaboration in the IT industry. Learn about the topic in depth before starting cooperation from this article.
What is a B2B Contract?
A B2B contract, also known as a business-to-business contract, is a legally binding agreement between two or more businesses that outlines the terms and conditions of a specific business relationship. In Poland, B2B contracts are regulated by the Civil Code and are commonly used in various industries, including the IT sector.
Typically, a B2B contract involves a service agreement where a contractor provides services to a company in exchange for payment. This type of contract allows businesses to engage with other businesses or individual entrepreneurs to fulfill specific needs without the constraints of traditional employment contracts.
B2B contract – key features
A B2B contract is executed between two independent entrepreneurs, where the Service Provider provides services to the benefit of the Service Receiver.
B2B contract is a civil law contract, regulated by Polish Civil Code and not restricted by labor regulations. Service providers as self-employed individuals are deprived of privileges typical for an employment relationship, such as annual leave, sick leave, remuneration during illness or maternity leave. Additionally, they must handle their own obligations and contributions related to health insurance and social security, often requiring registration with the social insurance institution.
The legal relationship created under a B2B contract is not covered by protection against termination resulting from labor regulation. B2B contract and employment contract differ in terms of rates, duration, and notice periods.
Employment contracts typically involve monthly rates and start with a 3-month probation period, followed by an indefinite contract. Notice periods vary depending on the tenure, ranging from 2 weeks for shorter tenures to 3 months for longer ones. For B2B contracts, rates are often based on a daily or hourly basis, and the contract can be either indefinite or fixed for 1 year and the parties can regulate the notice period freely (typically 1-month notice period).
B2B contracts shall be concluded between independent and equal business entities. In a B2B relationship it is vital that the service provider holds a reasonable degree of independence, decides discretionary on place, time and method of service performance.
B2B contract vs. employment contract
In Poland, B2B contracts are often concluded for employment laws circumvention where in fact an employment contract should have been executed.
B2B contracts shall not be compared to a traditional employment contract due to the completely different nature of the relationship they create. However, practice of employment market shows that B2B contracts are often considered as alternatives to employment contracts, as they present number of significant advantages:
- greater flexibility in terms determination, as B2B contracts are not subject to mandatory provisions of Polish employment law,
- lower cost as the service receiver does not top up the remuneration with mandatory contributions and taxes,
- lower bureaucracy on part of service receiver due to absence of withholding obligation
- lower taxation on part of service provider
Keep in mind that the name of the contract itself is not what counts – what truly matters are the real conditions under which the work is carried out. According to Article 22 § 1¹ of the Labor Code, if work is performed under the employer’s supervision, at a specified location, during set hours, and for payment, it constitutes an employment relationship, regardless of how the contract between the parties is labeled.
Tax Implications
B2B contracts have different tax implications compared to traditional employment contracts. Contractors engaged under B2B agreements are responsible for their own tax obligations, including personal income tax and social security contributions. They may also be eligible for tax deductions on business expenses, which can reduce their overall tax liability.
On the other hand, employees are subject to income tax withholding and social security contributions through their employer. Given the complexity of tax regulations, it is essential for contractors to consult with a tax professional to understand the specific tax implications of a B2B contract in Poland.
B2B contract – key facts
| NAME OF THE PARTIES | Service provider and Service receiver or the Company and the Contractor |
| PURPOSE | Provision of services by individual entrepreneur (self-employed) to another entrepreneur |
| TYPE OF CONTRACT AND ITS REGULATION | B2B contract is civil law contract regulated by Polish Civil Code |
| FLEXIBILITY IN DEFINING TERMS | Wide flexibility in defining terms of cooperation, certain limitations may apply, e.g. to non-compete after contract expiry. |
| REMUNERATION AND MINIMAL WAGE | Not applicable |
| FEATURES | ● Service provider is independent and shall possess reasonable flexibility in defining terms, place and time of services performance
● Service provider may not enjoy any of rights / benefits that are typical for employment relationship (sick leave, holiday, work time, rest periods etc.) otherwise the B2B contract may be qualified as employment contract |
| OBLIGATION TO REGISTER IN SOCIAL SECURITY | No obligation on part of the Service receiver. Service provider shall register in the social security system on his own. |
| OBLIGATION TO COLLECT AND REMIT TAXES | No obligation on part of the Service receiver. Service provider shall calculate and remit the taxes on his own. |
| OBLIGATION TO COLLECT AND REMIT SOCIAL SECURITY CONTRIBUTIONS | No obligation on part of the service receiver. Service provider shall calculate and remit the social security contributions on his own. |
B2B contract in IT industry in Poland
Engaging software developers through B2B agreements is a common practice in Poland, widely accepted by public authorities. Despite multiple attempts by the Polish government to limit B2B contracts to prevent the circumvention of employment laws, these efforts have been unsuccessful due to political and social resistance.
According to the latest statistics:
- Approximately 65% of software developers in Poland work under B2B contracts.
- Only about 35% are employed through traditional employment contracts.
The preference for B2B contracts among software developers can be attributed to the significantly lower taxation and social security contribution costs associated with this form of engagement. As a result, a larger portion of the budget is retained by the software developer (contractor). Additionally, understanding the financial aspects, such as compensation structures and taxation models, is crucial for ensuring fairness and competitiveness in B2B contracts.
According to legal experts, the engagement of software developers via B2B contracts is considered lawful under the following conditions, preliminary mentioned above:
- Independence and Autonomy – Contractors must retain significant independence and autonomy in their work and task performance.
- Lack of Subordination – Contractors should not work under conditions of subordination typical of an employment relationship. They must have control over how and when they perform their tasks.
- Distinctive Contractual Terms -The contract terms should reflect a B2B relationship, distinctly different from those in employment contracts, encompassing differences in benefits, rights, and obligations
Cost calculation of software developer engaged based in B2B contract and employment contract
As you may see in above table – in case of monthly total budget of 15.000 PLN for one software developer:
- Employee receives in his pocket approx. 9.000 PLN, remaining amounts are taxes and contributions;
- B2B contractor receives in his pocket approx. 11.000 PLN, remaining amounts are taxes (we assumed 12% flat tax typical for IT programmers) and contributions.
It is worth mentioning that in case of employment contracts all above figures shall be calculated and withheld by the employer; while in case of B2B provider all the above figures shall be calculated and withheld by the B2B provider himself.
As a result, the administrative / payroll burden stays on the side of: employer – in case of employment contract; B2B provider – in case of B2B contract.
B2B contracts in Poland for provision of software development services by individual entrepreneurs (CEIDG registered)
In Poland, private individuals may register themselves as individual entrepreneurs (also called: sole traders, self-employed or sole proprietorship) [in Polish: osoba prowadząca indywidualną działalność gospodarczą].
Such registration is performed in CEDIG portal. After registration such person may operate similarly as corporation (e.g. LLC or JSC), i.e. may buy and sell products or provide services, may register for VAT, may conclude and execute contacts or employ employees. Sole traders are obliged to pay social security contributions, run simplified accountancy, calculate, and pay income tax (PIT – personal income tax).
Sole traders are participating in business operations, quite similarly as companies. Key difference is that companies are legal persons, while sole traders are natural, individual persons.
Approx. 3 million individuals operate business in such legal form in Poland. Significant part of such individuals operates in software development business. It is a common practice that individual software developers operating as entrepreneurs (registered in CEDIG) provide services as Contractors, based on B2B contacts to Service Receiver.
Hiring software developers in Poland by international corporations has become increasingly popular. Please check what are the main reasons of this business decision:
- High-Quality Education System. Over 300 Polish tech universities produce many highly skilled graduates in computer science and related fields, forming a robust IT talent pool of Polish software developers and software engineers.
- Massive IT Expats Hub. Poland became one of key destinations for relocations of talented developers from Ukraine, Belarus, and Russia. It is one of the most popular destinations for outsourcing services due to its large talent pool with good technical skills and technical education.
- Skilled Workforce. Polish developers are known for their technical proficiency and problem-solving abilities. Companies at international market appreciate local developers especially because Polish developers work with popular programming languages and high-tech skills that fulfill all project requirements in the IT market.
- Cost-Effectiveness. Compared to Western Europe and the United States, the cost of hiring developers in Poland is lower.
- Cultural Compatibility. Poland’s cultural and business practices are similar to those in Western Europe and North America.
- Time Zone Advantage. Poland’s time zone (Central European Time) is convenient for coordinating with both European and North American offices. This overlap in working hours makes real-time collaboration more feasible.
- Strong English Proficiency. Many Polish software developers have a good command of the English language, which is crucial for international projects and communication.
- Growing IT Ecosystem. Poland has a rapidly growing tech industry with a robust ecosystem of IT companies, startups, software companies and tech hubs.
- Tax Incentive for Tech Companies. Polish government attracts IT investors with tax incentives such as IP Box, R&D Relief, Special Economic Zones
FAQ – B2B and other services contracts
Is a B2B contract alternative to employment contract in Poland?
No, B2B contract is not an alternative to employment contract. Both contracts are of totally different nature.
What are the main elements of a standard B2B contract in Poland?
Important components often include:
- scope of work,
- remuneration details,
- duration of the contract,
- basis of termination,
- transfer of intellectual property rights,
- liability rules,
- confidentiality clauses
- non-competetive clauses.
Are there established templates for B2B contracts in Poland?
Although there is no universal template that fits all situations, many industries in Poland follow widely recognized frameworks and include standard clauses that are tailored to their specific needs. These industry-specific provisions provide a foundation for B2B contracts, but the details often vary depending on the services involved.
To ensure that a contract is both legally sound and customized to your particular requirements and industry specific, it is highly recommended to seek advice from a legal expert familiar with Polish law. This approach helps ensure the contract complies with legal standards, reflects best practices, and effectively safeguards your interest.
How are intellectual property rights addressed in B2B contracts in Poland?
In B2B contracts in Poland, intellectual property rights play a significant role and are typically detailed explicitly within the agreement. It is essential to clearly specify ownership of any intellectual property created during the contract’s execution.
This includes identifying whether the hiring company retains the rights to the work or if the contractor holds them. Defining these rights is crucial for preventing potential disputes that may arise later, especially regarding the usage, distribution, or modification of the work. Clear terms help establish a legal framework that protects both parties’ interests and avoids conflicts related to intellectual property.
What are the forms of employment of managing directors in Poland?
Managing directors may be engaged based: Management contract, Employment contract for manager, Resolution on remuneration for performing corporate functions. In justified circumstances those forms may be applied parallelly.
What is mandate contract ?
Mandate contract is a services contract. It is civil law contract, not labour law contract. The fundamental difference between an employment contract and a mandate contract is that the mandatory is not subordinate to the mandator and as such is not required to follow the mandator’s instructions.
What is specific task contract ?
It is a project type contract where where the performing party has to bring specific, tangible result. Project contract is regulated by the Polish Civil Code and not by the Labor Code.
