Many foreign companies who are willing to employ IT specialists in Poland, ask themselves what are the differences between the B2B agreement and an employment contract (CoE). We have explained this in detail in a separate article. If you are interested in what B2B agreement means in Poland and what advantages and disadvantages it has in the context of employing Polish programmers, read the text below. As an IT recruitment agency with experience in recruiting this type of experts, we present to you the most important information about B2B contract in 2022.
What is a B2B contract?
A B2B (Business-to-Business) contract is an alternative to an employment contract (CoE). It is a contract between two companies that is regulated by the Civil Code. A Software Developer starts his own company (i.e. becomes self-employed) to provide services to another technology company. Instead of a monthly salary, they issue an invoice that the customer (recipient of the service) is required to pay.
A B2B contract gives both parties a lot of freedom in shaping the content of the contract, e.g. a notice period, (un-) paid sick leave. In the B2B contract, the employee (e.g. Software Developer) is responsible for making further transfers to the relevant institutions regarding tax or health insurance contributions.
What should an IT specialist who wants to be hired on B2B keep in mind?
- Taxes and ZUS contributions must be paid by a given IT specialist employed on B2B. Due to changes in regulations resulting from the Polish Deal, it is worth using the support of accountants or being up to date with the introduced changes. On July 1, 2023, new modifications were introduced, called Polish Deal 2.0. They concern e.g. changes regarding the health insurance contribution and the tax-free allowance (increased to 30,000 PLN). It is worth getting acquainted with the entirety of the changes introduced.
- You should choose the appropriate form of taxation, e.g. flat tax (19%) or lump sum (its amount depends on the type of business, e.g. 17% or 32%). Online calculators can help you check your monthly income. If we have information about our ZUS rate, taxation form and other costs of running a business, we will be able to quickly calculate the income.
- Working time is agreed with the recipient of the service.
- Sickness allowance is paid by ZUS.
- In the matter of paid leave, the parties may make a mutual agreement. However, paid leave in B2B without additional arrangements with the recipient does not exist (it is guaranteed only in the case of an employment contract).
- The notice period may be freely determined by the programmer and the recipient of the service in the contract.
- If the Software Developer was previously employed under an employment contract and wants to switch to B2B with the same employer, he or she will not be able to get tax relief for start or “a small ZUS”. Both benefits will only be available when you change employer to a new one.
B2B contract. Taxes in 2023
The Polish Deal brings many changes in the field of taxes. This includes, for example, raising the tax threshold, high tax relief, changes in the calculation of health insurance contributions for sole proprietorships and other new solutions in the field of labor law. The key changes for B2B contracts are presented in the table below.
What is more, from 2022, the calculation of the health contribution for a person who chooses a lump sum depends on the income earned, and the health insurance contribution is 9% of its assessment base.
What should an employer keep in mind when hiring an IT specialist on a B2B contract in Poland?
It is worth adding that the B2B contract is more beneficial for the employer and requires less effort in the preparation of documentation. Making payments is much less complicated – all you need is an invoice and an appropriate bank transfer for the specified amount.
B2B contracts mean lower costs for the employer
The table below can help you understand better the difference in earnings for B2B developers compared to an employment contract. We present the current data for March 2023.
It is also worth considering the current requirements of programmers on the labor market. Our 2022 report on the IT job market shows that an IT specialist employed on B2B expects a salary increase when changing jobs by an average of 25%. Considering the competitiveness of the offers on the labor market and the large need for recruiting people who are experts in given technologies, it is worth being aware of this phenomenon. The expected salary increase when changing jobs, together with a comparison of the level of experience and type of contract, is presented in the table below.
Programmers employed on B2B and CoE contracts expect a salary increase of 25% on average when changing jobs. Mids, who are employed on B2B contract, have the highest expectations (30%) regarding the increase in the current salary. In addition, the value of the expected bonus on an annual basis is 21% for a Mid, 17% for a Senior, 23% for an Expert, and 16% for a Junior.
Why is B2B popular among Spftware Developers in Poland?
The higher the level of seniority, the more B2B is preferred by Polish programmers
In the IT industry, the type of contract is largely related to the level of work experience. 65% of Juniors and 54% of Mids indicated that they were employed under an employment contract. In turn, 60% of Seniors and 57% of Experts, whose earnings are higher, most often cooperate on the basis of a B2B contract.
External Labor (B2B Service)
We can help in the case when your company can only employ IT Specialists on the basis of an employment contract, but some employees prefer cooperation based on a B2B contract. Thanks to External Labor (B2B Service) an employee signs a contract with us and issues an invoice to us every month for the services provided to your company, while you settle accounts with us.
If you are interested in this service, you can read more here about examples of cooperation.
If you are wondering about the detailed issue of hiring a programmer on B2B or CoE contract in Poland, we encourage you to read the article that will help you find out when a B2B or CoE contract may turn out to be a better option. Do you want to know more about why you should consider Poland when it comes to hiring Software Developers? Check out the top reasons in an article comparing other countries on cost and qualifications.