As part of the Entrepreneurs’ Package, the Ministry of Entrepreneurship and Technology has presented proposed changes to the reduced ZUS scheme, known as ‘500 Plus for Businesses’. The bill amending the Social Insurance System Act and the National Revenue Administration Act is undergoing public consultation. Under the proposed changes, some business owners will be able to pay social insurance contributions calculated on income.
Relief schemes
Business owners can currently claim several forms of ZUS contribution relief. In particular, those starting a business can use ‘start-up relief’, under which no contributions are payable in the first months of trading. The second option is preferential contributions for the first 24 months of activity. The third is the ‘Mały ZUS’ reduced contribution scheme, discussed in our article of 25 January 2019, ‘What is the new Mały ZUS scheme?’. ‘500 Plus for Businesses’, also called ‘Mały ZUS Plus’, changes precisely this last method of calculating contributions.
How does it work?
The principal change would link contributions to income rather than, as previously, revenue. Under the bill, a business owner whose revenue in the previous year did not exceed PLN 120,000 could pay ZUS contributions linked to income. Their monthly income would also have to be below PLN 6,000. On average, the contributions are expected to be several hundred zlotys lower than standard ZUS contributions. However, if the business owner deducted contributions as tax expenses, their income would be increased accordingly. Where the business operated for less than a year, the maximum revenue threshold would be reduced proportionately.
Who will benefit?
The bill requires at least 60 days of business activity in the previous year to qualify for relief. The contribution assessment base may not exceed 60% of the projected average salary or fall below 30% of the minimum wage in January of the relevant year. Under the new rules, the assessment base is monthly income multiplied by 0.5. Accordingly, the maximum income of a business owner wishing to use Mały ZUS Plus generally cannot exceed PLN 6,000. Reduced contributions may be paid for up to 36 months within 60 consecutive months of business activity. Those already using Mały ZUS will pay contributions under the new rules.
Who will not benefit?
500 Plus for Businesses will not be available to business owners who, in the previous year, used the tax-card regime while also benefiting from VAT exemption. Those providing services to a former employer are also excluded. Nor does the relief cover persons insured on a basis other than their business activity.
Information for ZUS
Because the new contributions will depend on income, additional information will have to be supplied to ZUS. In addition to annual revenue, business owners will have to report their income and form of taxation. This information will be submitted in the individual monthly report or the contribution settlement declaration.
Deadline for opting in
For now, the bill introducing Mały ZUS Plus remains at the public consultation stage. Once the changes enter into force, business owners are expected to have until the end of January 2020 to declare that they wish to use the new rates.
