As announced by the government, the threshold for exercising the power to pay proportional contributions to the Social Insurance Institution, which is now the so-called ‘small Social Insurance Institution’, will be further determined by income, rather than – as yet – only by achieving a certain income by the entrepreneur.
The Ministry of Finance has published the amount of the forecast average monthly remuneration per 2020 level 5,227 PLN. As the basis for the contribution to the Social Insurance Institution is 60% the estimated average monthly salary, this means an increase in business social security spending in 2020 o 94.49 PLN, Therefore, 9.7% year 2019. The dimension of social security contributions, excluding health contributions, in 2020 is therefore 1,069.14 PLN.
According to the current legal situation, entrepreneurs who start their business can benefit from the so-called six-month start-up allowance, consisting of paying only the health contribution which in 2019 average per month 342.32 PLN. Beginner entrepreneurs can also benefit from a two-year relief, i.e.
the benefit of preferential social security contributions in the amount of 555.89 PLN per month, provided that they have not been in business during the last 60 months and from two years do not provide services identical to the scope of their work for a former or current employer.
As announced by the head of government, entrepreneurs will be able to benefit from the so-called "small ZUS" if their income does not exceed 6,000 PLN per month and revenues will not exceed 10,000 PLN per month and thus the annual income threshold will increase to 120,000 PLN
It should also be pointed out that according to the content Article 5. section 1 of 6 March 2018 - Business law shall not constitute an economic activity carried out by a natural person whose income due from that activity does not exceed in any month 50% the amount of minimum remuneration referred to in the Act of 10 October 2002 with minimum wage for work (Journal of Laws of 2018, item 2177), and which in the last period 60 months did not carry out economic activity, therefore persons who have been in the last five the years have not been in business activity and have achieved the lowest revenues are not obliged to pay social security and health insurance contributions (so-called ‘unidentified activities’).
From 1 January 2019 entrepreneurs can also benefit from the so-called ‘small ZUS’, i.e. pay social contributions on the basis of the assessment basis, the amount of which depends on the revenue generated for the previous calendar year. As announced by the head of government, entrepreneurs will be able to benefit from the so-called "small ZUS" if their income does not exceed 6,000 PLN per month and revenues will not exceed 10,000 PLN per month and thus the annual income threshold will increase to 120,000 PLN.
Conditions for using the so-called "small ZUS"
Based on Article 18c. Act of 13 October 1998 on the social security system (Journal of Laws of 2019, item 300), concerning the lowest basis for the contribution of persons performing economic activity on a smaller scale, i.e.
the so-called ‘small ZUS’, the condition for exercising the above-mentioned entitlement is to conduct business activity on the basis of an entry in the Central Register and Information on Economic Activity (CEIDG) or other specific provisions, and to conduct it by at least 60 the days of the previous calendar year, while not exceeding the limit of revenue for the previous calendar year set by the legislator.
For people who throughout the year 2018 without any interruptions, the individual economic activity was subject to the use of the so-called "small ZUS" to not exceed the income threshold of thirty times the minimum wage applicable for December of the previous year, i.e. according to the condition for 2019 not exceeding the income threshold of the amount 63,000 PLN.
Provided that the current legal situation does not change for one year 2020 This threshold will be 67,500, Minimum remuneration per year 2019 was increased by more than 7%, i.e. up to the amount 2,250 PLN.
For those who have been in business for only part of the previous year, the limit, which cannot exceed the income from that activity, is proportionally lower, i.e. according to the state of the 2019 amount 63,000 PLN divide by number 365 i.e.
the number of calendar days from the previous year and then multiply the indicated result by the number of calendar days of business activity in the previous calendar year. The above-mentioned result shall be rounded up where the tip is equal to or above 0.5 gr, be down if it's lower.
It should also be borne in mind that, in order to obtain the above mentioned sixty the days of business in the previous year, it is necessary to take into account only the activity actually carried out. In a situation where the economic activity has been suspended by the entrepreneur during the year, for example since March 2018, from that date, the entrepreneur may not count the following days to the indicated limit.
However, entrepreneurs may not benefit from the right to pay the so-called "small ZUS" where:
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- in the preceding calendar year, they accounted for each other in the form of a tax card and benefited from the exemption from sales of goods and services;
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- where they meet the conditions for payment of preferential premiums, i.e. contributions from the declared amount not less than 30% minimum remuneration;
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and, where they were subject to social or health insurance in the previous calendar year also for other non-agricultural activities referred to in Article 8(6)(2-5) Act of 13 October 1998 on the social security system (Journal of Laws of 2019, item 300) – as regards creators and artists; persons active in the field of free profession, provided that they do not carry out activities on the basis of an entry in the CEIDG; a partner of a single-member limited liability company and members of a public, limited partnership or partnership company; persons running a public or private school, other form of pre-school education, establishment or their team, under the provisions of the Act of 14 December 2016 – Educational law (Journal of Laws of 2018, items 996, 1000, 1290, 1669, 2245);
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or, carry out non-agricultural economic activities for the benefit of a 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 within the framework of the employment relationship or cooperative employment relationship which fall within the scope of the non-agricultural business activity carried out.
Small “ZUS” entrepreneurs can use the maximum by 36 months in the last 60 the calendar months of individual business.
Amount of social security contribution at the so-called ‘small Social Security’
At the time of use of the "small ZUS" by the entrepreneur, he may pay insurance contributions from the lowest base of assessment or declare a higher base in each month. This means that the entrepreneur will pay a fixed flat-rate amount per month calculated at the beginning of the year for the entire calendar year in which he is subject to the ‘small ZUS’.
In order to establish the lowest base for social security contributions, first the order of establishment of the average monthly business income in the preceding calendar year according to the formula:
The result shall be rounded up to a full penny up each time if the end is equal to or higher than 0.5 gr, be down if it's lower.
The average monthly income for conducting non-agricultural business activity in the previous calendar year should be multiplied by the coefficient which the President of the Social Insurance Institution announced in the “Polish Monitor” which in 2019 is 0.5083.
The basis for the assessment of insurance premiums thus established should be declared by the entrepreneur in the declaration of the Social Insurance Institution, while the individual social security contributions will be determined by the product of the average monthly income for the conduct of non-agricultural business activity in the previous calendar year, together with the coefficient which the President of the Social Insurance Institution announces in the ‘Polish Monitor’ and the corresponding percentages for the individual pension contribution (19.52%), pension insurance (8%), accident insurance (1.67%), voluntary sickness insurance (2.45%).
However, before declaring this amount, the result obtained from 30% minimum remuneration and 60% the estimated average monthly remuneration, as the basis for the assessment of social security contributions for entrepreneurs paying income-based contributions must not be lower than the minimum base adopted for the so-called preferential Social Security Fund provided for the start-ups, i.e.
30% the amount of the minimum remuneration for the year in question, nor may it be higher than 60% the estimated average monthly remuneration fixed for a given year, i.e. exceeding the minimum base for social security contributions adopted for a large ZUS.
In addition, it should be pointed out that amendments to the law that entered into force since 1 January 2019, introducing the so-called ‘small Social Security’, does not concern the basis for the assessment of health insurance contributions, which means that health insurance contributions are not less than when using the ‘small Social Security’, as these contributions are counted from the declared amount not lower than 75% the average monthly remuneration in the enterprise sector in the fourth quarter of the previous year, including profit payments.
Obligations of the entrepreneur using the so-called "small ZUS"
In addition to the standard obligations relating to the subject of social insurance, which also apply to other contributors, such as the transfer of insurance documents or the payment of contributions, an entrepreneur subject to ‘small Social Security’ is obliged to:
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- the transfer in the statement of account (ZUS DRA) or in the first-name monthly report of information on the annual income for the conduct of business activities and on the lowest contribution base;
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the presentation, at the request of the bodies of the Social Insurance Institution, of documents which confirm the annual income achieved for the performance of business activities for the previous calendar year during the 14 calendar days following the service of the notice and, in the absence of a presentation, the Authority shall determine the basis for the contribution of 60% the estimated average monthly remuneration for all months of the year concerned.
The entrepreneur may, at any time, also waive the right to pay the so-called ‘small ZUS’ from the date of acquisition of that entitlement, then for the month in which the entrepreneur waives the entitlement, and for the remaining calendar months until the end of the calendar year in question, the entrepreneur will pay social security contributions on the amount declared not lower than the amount declared 60% the estimated average monthly remuneration.
Notification to insurance of the so-called ‘small ZUS’
The exercise of the right to pay lower contributions of the so-called "small ZUS" is linked to the change of the so-called code of insurance to code 05 90, Therefore, an entrepreneur who meets the conditions for obtaining a ‘small ZUS’ should complete the following formalities:
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- register from existing insurance using the ZUS ZWUA form;
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and then report to social security with a new code 05 90 by means of the ZUS ZUA form or, if the entrepreneur is only subject to health insurance, to submit an insurance declaration (ZUS ZZA) with an insurance title code starting from 05 90 either 05 92 (the insurance title code provided for persons with a pension granted for incapacity for work.
ZUS DRA
An economic operator shall also be obliged to submit a statement of account.
If the entrepreneur pays contributions only for himself he submits to the Social Insurance Institution a declaration of ZUS DRA to 10-until the day of the month following the date of registration, which means that where registration took place in January, the ZUS DRA declaration shall be submitted by the trader within the time limit 10 February.
This period shall be extended to 15. The day of the month for an entrepreneur employing employees.
The ZUS DRA declaration should contain information on the income obtained from the business activity in the previous year and on the basis of the contribution ratio that will apply to us this year.
If the entrepreneur does not employ employees and decides to pay the minimum contributions to the Social Insurance Institution for both the preferential ones (including the ‘small Social Insurance Institution’), as well as the basic ones – the minimum and the size of the contributions does not change during the year, then the entrepreneur is not obliged to submit a declaration to the Social Insurance Institution every month, but only first declaration, made after first month.
However, in the case of any changes in the payment of contributions during the year, including because of sick leave, or in the case of payment of contributions in the amount declared higher than the minimum amount, then the trader is obliged to submit a DRA declaration also during the year (in the case of payment of contributions in the amount declared, the obligation to submit declarations every month).
Time limit for submission of documents
According to the current state of the law, the above-mentioned documentation should be sent to the Social Insurance Institution within the time limit 7 days from:
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1 January, which means that to 8 January This year, the documents should be transferred to the Social Insurance Institution, where the entrepreneur continues to carry on his business in the previous year, or where at the end of December he ended the period of payment of the so-called "preferential contributions", then the insurance with the code should be deregistered. 05 70 either 05 72 and register with code 05 90 either 05 92;
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first the date of establishment or resumption of business;
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first the date on which the entrepreneur meets the conditions for the use of the ‘small ZUS’, which concerns those entrepreneurs, who are operating less than 2 the years ending the period of the so-called ‘preferential contributions’ during the calendar year in which the entrepreneur wishes to use the ‘small ZUS’, which means the possibility of submitting to the ‘small ZUS’ during the calendar year, just after the end of the period of the previous preference, i.e. within the time limit 7 days from the end of the preferential period.
Except for persons who may submit a notification during the calendar year, economic operators who have failed to complete the formalities with regard to the Social Insurance Institution within the period until 8 January only from the next calendar year.
Please indicate that one of the requested amendments to the so-called ‘small ZUS’ is an extension of the deadline for submitting applications to 31 January each calendar year, but in the current state of the law, this is only a request.
Sources: Act of 13 October 1998 on the social security system (Journal of Laws of 2019, item 300); Act of 6 March 2018 Business law Journal of Laws of 2019, item 1292 t.j. of day 12 July 2019); www.zus.pl; www.gov.pl