Small ZUS for small entrepreneurs

Regulations of the Act of 20 July 2018 amending certain laws to reduce social security contributions of individuals engaged in smaller-scale economic activities[1] introduced 1 January 2019 to the Act of 13 October 1998 on the social security system[2] new arrangements allowing, under the conditions provided for in this respect, preferential establishment of the basis for contributions to compulsory social security for non-agricultural persons and therefore persons subject to compulsory insurance under the regulations Article 6(1)(5) U.s.u.s.

1. Introduction — entitlement to determine the contribution base from the declared lowest value

Where appropriate, where the principle is that the basis for the assessment of the pension contributions of the insured persons concerned under Article 6(1)(5) u.s.u.s.

shall constitute the declared amount, but not less than 60% the estimated average monthly remuneration adopted to determine the amount of the reduction in the annual contribution base as declared under the scheme Article 19(10) u.s.u.s.

for a given calendar year, the solutions already in force provide for preferences specific to start-ups, i.e. concerning:

1. discount on start – provided for by the regulations of the Act with 6 March 2018 Business law[3] and
2. payment of social security contributions in first 24 the months in which that activity takes place, in accordance with the conditions resulting from the content Article 18a u.s.u.s., on the basis of the amount declared, not less than 30% the amount of the minimum remuneration.

In addition, regulations of u.o.s.u.s. introduced the possibility of preferential determination of the basis for determining social security contributions by persons conducting non-agricultural business activities.

However, this new preference applies only to those persons whose annual non-agricultural business income in the previous calendar year did not exceed thirty times the minimum wage applicable in December of the previous year. Consequently, the above mentioned and introduced 1 January 2019 to u.s.u.s.

solution, it should be noted that, under the other conditions required by the preferential establishment of the social security contribution base In 2019 may benefit those persons engaged in non-agricultural economic activities whose income In 2018 not exceeded 63,000 PLN (30 × 2,100 PLN).

At this point, it should be stressed in particular that the limit in question refers to the value achieved by the economic operator of the annual income rather than the income generated by that activity. This means, therefore, that this preference will not be used by such an entrepreneur who, despite having recorded a low profit or even a loss in the previous year, will exceed the amount of income 63,000 PLN.

In addition, it should be noted that the annual income limit indicated is reduced proportionately in certain cases. Appropriately, according to content Article 18c(7) U.s.u.s.

annual income limit for the conduct of non-agricultural business activities referred to under Article 18c(1u).s.u.s., in the case of commencement, termination or suspension of activities during the previous calendar year, shall be reduced proportionately, dividing the amount of the minimum remuneration in force in December of the preceding calendar year by the number of calendar days in the preceding calendar year by multiplying by the number of calendar days of non-agricultural business activity in the preceding calendar year, and shall be rounded to full grope upwards if the end is equal to or higher than 0.5 a penny, or down, if it is lower.

Example

Adam Kowalski In 2018 conducted non-agricultural business activities from 1 July. In this case, the setting of the income limit achieved in the previous year and allowing for the payment of compulsory social security contributions for the conduct of non-agricultural business needs to take account of the duration of that activity.

Economic activity In 2018 was conducted by 184 days, therefore the value of income from 2018, the excess of which results in the lack of the right to benefit from the preferences in question, 31,758.9 PLN, resulting from the calculation of: (63,000 ÷ 365) × 184 = 31; 758,902 PLN – after rounding 31,758.9 PLN.

As regards the issue under consideration, it should be stressed that the arrangements introduced in the regulations of u.s.u.s. for determining the lowest social security contribution base are applicable only to social security contributions, i.e.

insurance premiums on pensions, sickness and accident– paid by persons subject to non-agricultural business insurance as referred to in the content Article 8(6)(1) U.s.u.s.

As a result, these regulations do not in any way refer to the dimension of health insurance contributions which In 2019 are paid by persons engaged in non-agricultural economic activities from the declared amount not less than 75% the average monthly remuneration in the enterprise sector in the fourth quarter of the previous year, including profit payments.

2. Exemptions from the application of preferences

When analysing the issue of the payment of compulsory social security contributions for the course of business according to the regulations introduced by u.o.s. preferential arrangements, it is necessary to indicate on the list of those entities for which exemptions from the scope of the preferences in question are provided for. Name according to content Article 18(11) U.s.u.s. recipes Article 18c U.s.u.s. shall not apply to persons who (or to whom):

1. in the previous calendar year, the provisions on flat-rate income tax in the form of a tax card applied and which benefited from the exemption from sales of goods and services on the basis of Article 113(1)(9) Act on 11 March 2004 on tax on goods and services[4];
2. meet the conditions laid down under Article 18au.p.u.s. (i.e. benefit from preferential rules for establishing the basis for contributions provided for in first 24 months of establishment) ;
3. in the previous calendar year, they carried out non-agricultural business activities for less than 60 calendar days;
4. in the previous calendar year, they also carried out non-agricultural activities in question under Article 8(6pkt), points two to five, u.s.u.s.;
5. carry out non-agricultural economic activities for the former employer for which, before the date of the start of the non-agricultural business activity in the current or previous calendar year, they carried out activities in the framework of an employment relationship or cooperative employment relationship falling within the scope of the non-agricultural business activity carried out;
6. establish the lowest basis for the assessment of pension contributions in accordance with this Article by 36 calendar months in the last 60 the calendar months of conducting non-agricultural business. The above limits shall include, as a full month, each calendar month in which the person appropriately established the lowest basis for pension insurance contributions in accordance with this Article or pursued non-agricultural business activities for at least one calendar day.

At the same time, disposition Article 18cust. 12 u.s.u.s. establishes that for persons to whom the provisions on flat-rate income tax in the form of a tax card apply and who have not benefited from the exemption of sales on the basis of the tax on goods and services Article 113(1)(9) the VAT Act, by the income in question under Article 18(1) U.s.u.s., the value of the sales in question shall be understood under Article 2(22) the VAT Act, subject to that tax, without the amount of that tax.

Example

Mr Adam Nowak from 2015 operates an economic activity in the provision of passenger taxi services.

Mr Adam has chosen tax in the form of a tax card since the start of this activity in the field of taxation of income obtained from that activity, while also benefiting from VAT exemptions in relation to the value of the turnover achieved (based on Article 113(1)(9) the VAT Act).

In spite of the above-mentioned flat-rate form of income taxation and VAT exemptions, Mr Adam records the value of the sales made by means of the mandatory provision of taxi services to the register office and the value of the sales In 2018 Common 45,000 PLN.

Regrettably, the designated entrepreneur, despite the low revenue value (selling value) achieved and established (based on the record of sales by the fiscal cash register) In 2018, may not benefit from preferential payment of ZUS contributions under the conditions provided for Article 18c u.s.u.s..

Such qualification is directly due to regulation Article 18c(11)(1) U.s.u.s.

3. Application documents

The payment of compulsory social security contributions by persons insured for conducting non-agricultural business activities from the lowest declared basis (under regulation 18c u.s.u.s.) requires the selection of such a formula of the accounts of the Social Insurance Institution.

The formula for paying the so-called small ZUS is a voluntary solution, which means that an entrepreneur who meets the conditions for using this preferences may pay contributions on a general basis or choose to pay them according to established rules under Article 18cu.s.u.s.

Consequently, it is necessary to transfer to the Social Security Office the documents required in this respect, i.e.: 1) deregistration document from existing social insurance (print of ZUS ZWUA) with the current insurance code and therefore with the code starting 0510, 0512(if business continues) and 2) registration document for social insurance (print ZUS ZUA and for persons subject exclusively to health insurance – ZUS ZZA printing) with the code starting 05 90, 05 92 (the code provided for persons with a disability pension.

Application documents for the selection of the contribution base based on regulations Article 18c U.s.u.s. must be transmitted within the time limit 7 days from:

1. 1 January the year in question, in the case of entrepreneurs continuing to carry out business activities carried out in the previous year (including those who lost their right to benefit from existing preferences by the end of December of the previous year),
2. first the date on which the economic activity is carried out or resumed during the year,
3. first the date on which the entrepreneur will meet the conditions of use of the so-called small ZUS within a year – for example, when during 2019 out 24-the monthly preferential period for establishing the basis for social security contributions, according to Article 18a U.s.u.s.

Example

Mr Jan Kowalski started conducting non-agricultural business 1 May 2017 It shall be subject to compulsory social insurance for the purpose of carrying out that activity, subject to the content of the Article 18a u.s.u.s.

by first 24 months of contribution to these insurances pays on the amount declared, but not less than 30% the amount of the minimum remuneration.

The period of preferential payment of contributions under these rules will expire 30 April 2019 The entrepreneur meets the criteria for paying contributions according to the rules contained under Article 18cu.p.u.s.[8] May 2019 the designated entrepreneur, in order to benefit from the possibility of paying the so-called small ZUS, must transfer to ZUS: 1) ZUS ZWUA document, deregistration 1 May 2019 ZUA insurance, making registration 1 January 2019 for coded insurance 05 90 00.

4. Method of calculating the lowest contribution base

With regard to the principle of establishing the basis for the payment of social security contributions by persons entitled to benefit from the preferences introduced by the regulations of u.o.s.u.s., reasonable First, becomes an indication of the adjustment of u.s.u.s. disposition Article 18c(1).

This standard establishes that the lowest basis for the assessment of the pension contributions of the insured persons concerned under Article 8(6)(1) U.s.u.s., whose annual income for non-agricultural business activity in the preceding calendar year has not exceeded thirty times the minimum wage in force in December of the previous year, depends on that income.

At the same time, regulation Article 18c(2) u.s.u.s. indicates that the lowest basis for the contribution dimension in question Under section 1, shall not exceed 60% forecast average remuneration announced in the procedure Article 19(10) u.s.u.s.

for a given calendar year and may not be less than 30% the amount of the minimum remuneration in force in January of that year. However, according to sound Article 18c(3) u.s.u.s. the lowest contribution base in question under Article 18cust.

1 u.s.u.s., the insured person shall determine the calendar year given, multiplying the average monthly income obtained by the insured person for the conduct of non-agricultural business activities in the previous calendar year, calculated according to Article 18c(4) u.s.u.s., by the coefficient referred to in provision 18c, section 5 u.s.u.s., announced for the calendar year.

The result obtained is tcharounded to full pennies up if the tip is equal to or higher than 0.5 a penny, or down, if it is lower.

Having regard to the above regulations, First, indicate the method of calculating the average monthly income achieved in the preceding year by a person conducting a non-agricultural business, In the second and – in the final way of calculating the lowest social security contribution base. As a result, according to Article 18cust.

4 u.s.u.s., it must be stated that the average monthly income for non-agricultural business activities in the previous calendar year is calculated according to the following formula:

The result obtained shall be rounded to a full penny up if the tip is equal to or above 0.5 a penny, or down, if it is lower.

Example

Mr Jan K. conducted business throughout the whole 2018 Meets payment conditions In 2019 contributions according to the so-called small ZUS. In 2018 Mr. John has achieved a business income of 50,000 PLN.

In such a situation, the average monthly income of the designated entrepreneur reached In 2018 to be calculated as follows: (50,000 ÷ 365) × 30= 4,109.589. As a result, when making the required rounding, it must be stated that the average monthly income achieved from economic activity In 2018 in the indicated case, 4,109.59 PLN.

The next step in the individual process of determining the lowest basis for the assessment of social security contributions for the purposes of paying them in the form of the so-called small Social Insurance Institution is the need to multiply the average business income calculated by the entrepreneur in the previous year by the coefficient indicated and determined on the basis of the content of the regulation Article 18c(5) U.s.u.s.

However, it should be noted that according to Article 18c(6) u.s.u.s. President of ZUS announces the amount of this coefficient in the Official Journal of Poland “Monitor of Poland”.In 2019 the value of this coefficient is 0.5083.

Example

Average monthly business income of the entrepreneur (as indicated in the previous example of John K.) In 2018 was 4,109.59 PLN. As a result, the lowest base for contributions to 2019, from which the designated entrepreneur can pay these contributions, 2,088.9 PLN, which results from the calculation of: 4,109.59 PLN × 0.5083.

When considering the rules for calculating the social security base in the form of a small ZUS, it should be noted that according to the wording of the Article 18cust. 2 The lowest contribution base shall not be lower than 30% the amount of the minimum remuneration in force in January of that year.

Thus, if, as a result of the calculations made, the entrepreneur determines that the lowest contribution basis calculated from the average monthly business income achieved in the previous year is lower than 675 PLN (30% minimum applicable In 2019 salaries from the employment relationship), contributions in the formula of the small Social Security Office should be paid from the lowest acceptable basis for calculating them, i.e.

of amount 675 PLN. In addition, according to the content Article 18cust. 8 U.s.u.s.

insured, in question under Article 18c(1) u.s.u.s., may declare as the basis for the assessment of pension and pension contributions an amount higher than the lowest basis for the assessment of pension and pension contributions determined in accordance with Article 18c U.s.u.s.

However, then the basis for paying contributions under the small Social Security Office must not exceed 60% forecast average remuneration announced under the procedure Article 19(10) U.s.u.s. for a given calendar year.

5. Settlement declaration

Analyzing the issue of settlement declarations submitted by the entrepreneur (paying social security contributions according to the formula of the small ZUS), it is worth First, note that according to sound Article 18c(9) U.s.u.s. insured, in question under Article 18c(1) u.s.u.s. shall provide information on the annual non-agricultural business income obtained in the preceding calendar year and on the lowest contribution base established for the calendar year in question in:

• 1) the name of the monthly report or
• 2) in the statement of account, in the case referred to under Article 47ust. 2 U.s.u.s.
• – submitted for January of the calendar year concerned or for first the month of the start or resume of non-agricultural business activity in the calendar year concerned.

As a result of this regulation, the insured person was required to provide the Social Insurance Institution with information on the annual income for conducting non-agricultural business activities obtained in the previous calendar year and on the lowest basis of the contribution rate established for the calendar year.

This information shall be provided on the ZUS RCA Part II form (in the case of the insured person for whom the personal monthly report is submitted) or on the ZUS DRA Part II form (in the case of an entrepreneur who pays contributions only for himself, in accordance with the Article 47(2) u.s.u.s.).

In addition, for those entrepreneurs who pay their business insurance contributions only for themselves, it should be noted that, in view of the choice of paying contributions according to the small ZUS, they are not obliged to submit settlement declarations (ZUS DRA) monthly.

According to the introduced 1 January 2019 (by u.o.s.u.s.) regulation Article 47(2g) u.s.u.s., persons carrying out non-agricultural business activities, paying contributions exclusively for themselves or persons cooperating with them and establishing the lowest basis for the assessment of pension and pension contributions according to Article 18c u.s.u.s., shall be exempt from the obligation to submit a statement of account or a personal monthly report for the following month after submission of a statement of account for first the full month, by the end of the calendar year on which they established this basis.

These persons are obliged to submit a statement of account for first month of economic activity of each subsequent year for which they established the lowest basis for the contribution dimension on the basis of Article 18c U.s.u.s.

Example

Mrs.

Karolina (paying contributions only for herself), meeting the conditions for paying contributions In 2019 from the lowest declared basis (according to content Article 18c u.s.u.s.), has done so 5 January 2019 relevant notifications and 6 February 2019 made a statement of account for January 2019 together with Part II (ZUS DRA and ZUS DRA Part II), in which it indicated the amount of average monthly business income from 2018 and the value of the lowest established contribution base In 2019 The entrepreneur intends to use the small ZUS throughout 2019 In this situation, Ms Karolina will be required to submit a statement of account (ZUS DRA) only for first month of business activity In 2020 If In the next the conditions for continued use of the small ZUS will be met in the year, making such a choice, it will be necessary to transfer, together with the statement of account for January 2020, information on the annual return for non-agricultural business activity obtained in the previous calendar year (i.e.2019) and the lowest contribution base established for the calendar year (i.e.

2020).

6. Verification obligations

In the aspect of the issue analysed, it is difficult not to notice that the solution for paying the so-called small ZUS is based on parameters which are appropriate for the regulation of the Law of 26 July 1991 on personal income tax[5]. Namely, the basic determinant of the existence of the power to apply the u.s.u.s.

preferences for the payment of contributions, as well as establishing the basis for their payment, is the value achieved by the insured entrepreneur's income from business activity.

Therefore, for the purpose of verifying the admissibility of the undertaking to pay compulsory social security contributions for the conduct of business from the lowest declared basis, and for the purpose of verifying the correctness of the calculation of this basis for the regulation of u.s.u.s. (under u.s.u.s.) Article 48c.

This standard establishes that the insured person setting the lowest basis for the assessment of pension contributions according to Article 18c u.s.u.s.

is obliged to present, on request, documents confirming the annual income for conducting non-agricultural business activities for the previous calendar year, within the time limit 14 calendar days from the date of service of the call, under the rigour of the determination by the Social Security Office for all months of the calendar year of the basis for the assessment of contributions on a defined basis under Article 18(8) U.s.u.s.

It should be noted that the lack of compliance by the insured entrepreneur with the obligation to present required by the Social Security Office in accordance with Article 48cu.s.u.s.

documents, leads to the possibility of imposing far-reaching sanctions by the Social Security Office for all months of a given calendar year, the basis for the assessment of contributions on a defined basis under Article 18(8) u.s.u.s., and thus in the amount of contributions paid by entrepreneurs not benefiting from any preferences in this respect.

7. Resignation of preferences

In terms of paying issues In 2019 the compulsory social security contributions of non-agricultural persons from the lowest basis for establishing those contributions established on the basis of the revenues achieved in the previous year by the entrepreneur should be noted that this solution is of the type of entitlement.

Therefore, the solution introduced to u.s.u.s. (under u.o.s.u.s.) provides for the possibility of giving up this preferential formula for paying contributions within a year. Name according to content Article 18c(10) u.s.u.s.

may waive entitlement to determine the lowest basis for the assessment of pension and pension contributions in accordance with Article 18c U.s.u.s.

Resignation means that for the month in which he has waived his entitlement and for the remaining calendar months until the end of the calendar year in question, he shall determine the lowest basis for the assessment of pension and pension contributions on a defined basis. Under Article 18(8u).s.u.s.

Example

Mrs Anna K., conducting non-agricultural business activity from 10 years, she filed 5 January 2019 notification documents on how to pay social security contributions In 2019 from the lowest base for the assessment of pension contributions according to Article 18c U.s.u.s. Consequently, from January to May 2019 Mrs.

Anna paid contributions from a fixed lowest contribution base. But since June 2019 Mrs. Anna intends to give up this form of contribution. In such a situation, Ms. Anna should 1 June 2019 deregistration from the code 05 90 00 (print ZUSZWUA) and register with code 05 10 00 (ZUS ZUA printing).

It should be stressed that the waiver of the preferential formula for payment of contributions during the year leads to the need to pay them to the end 2019 in accordance with the general principles, and therefore on the basis of the contribution rate determined in accordance with Article 18(8) U.s.u.s.

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