Lower ZUS contributions from 2018

In a recent press conference from the Ministry of Finance, Deputy Prime Minister Mateusz Morawiecki shed some light on government plans regarding changes to legal provisions regarding companies. More specifically, the new government ideas connected with the mandatory social insurance contributions that Polish companies have to pay.

The officials want to free small enterprises from some of the taxation burden. The government recognize the need to change the rules of the game for the entrepreneurs who do not earn much revenue and who struggle to stay on the market.

According to Polish law, all business entities are under obligation to settle monthly contributions to Social Insurance Institution (ZUS) for all their employees. Although the contributions formally are not part of the tax system in Poland, the reality is they cannot be escaped and for many constitute a strong obstacle for conducting business operations.

The amount of the contribution payments is calculated based on the employee salary and average salary in the fourth quarter of the preceding year. As from January 2017, the minimum monthly salary in Poland is 2000 PLN, so each month taxpayers need to transfer out at least 190 PLN per every employee. For certain entrepreneurs, especially those self-employed, ZUS payments make running business very hard.

Companies with low turnover and revenue came into the focus of the lawmakers a few months ago. New regulation is already on its way. Government officials are going to introduce a new type of legal structure for conducting operations in Poland: unregistered business activity. In short, small entrepreneurs, with revenue not exceeding half of the minimum salary, will be exempt from the obligation to register their operations and pay social insurance contributions. Registered companies with low revenue will in turn will pay less than today. Another idea is to free beginner entrepreneurs from ZUS contributions altogether for the first six months of running business.

The new provisions are to come into effect from 1 January 2018. The project is currently in the consultation phase.