Social insurance contributions lowered for sole entrepreneurs
From January 2019, sole proprietorships (natural persons conducting business activity) enjoy lowered social insurance contributions payments. The amount of contributions, which are obligatory, will be correlated with the company’s turnover. It will be a significant change to thousands of business entities in Poland.
As all companies in Poland, single-person businesses pay mandatory contributions to Zakład Ubezpieczeń Społecznych (Social Insurance Institution), or ZUS. The exact amount changes from year to year. In 2018, contributions payments exceeded 1200 PLN a month. For sole proprietorships, this is very high. Payments to ZUS is something businesses in Poland complain about a lot. The transfers cannot be avoided and there is little an entrepreneur can do to keep them low (apart from preventing employee salaries to rise). A company does not generate income, it is still under obligation to make payments to ZUS.
The Ministry of Finance decided to lighten some of the burden connected with the payments. Natural persons who decide to carry out business operations will pay lower monthly transfers if their annual turnover does not exceed the amount equal to thirty times the minimum monthly renumeration for work (in 2019, that is 2100 PLN net). The lower the turnover, the lower the contributions. This solution will allow more enterprises to stay in the market longer.
Entrepreneurs need to remember that the change does not happen automatically. They need to re-register as contribution payers at ZUS. The deadline for this is the 8th of January 2019. The procedure may be done electronically. The very short time frame for applying is criticised by business owners and experts alike. Many people point to the fact that numerous entrepreneurs are not yet aware of the new regulations. The Ombudsman for Small and Medium Enterprises has made a plea to the government to extend the period.
An important thing to know is that the low contribution amounts are not available for newly formed companies, i.e. those that on the 1st of January were less than 60 days old.