Will ZUS Contributions Kill Polish Companies?

The life of an entrepreneur of Polish Companies in Polish can be tough. Especially when the authorities announce the official amounts of social insurance contributions. The 2020 numbers have just been released and, once again, the payments, which are made for every legally employed person, will go up.

In fact, the government prepared the biggest hike in the contribution amounts in several years. For business owners or Polish companies in Poland, especially from the SME sector, this is bad news.

The payments are made every month to the Social Insurance Institution, or ZUS on behalf of every employee. The amount is calculated taking into consideration the person’s gross salary. For many years, entrepreneurs in Poland have been trying to convince the legislators that the cost of ZUS hamper business and the entire Polish economy.

How Polish Companies Impact on GDP Growth:

ZUS payments depend on the prognosis of the average salary which is adopted every year by the government. Next year, the minimum salary goes up in Polish companies, the average monthly remuneration goes up, and so does social insurance.

In fact, in 2020, the cost of employing someone will be 10 percent higher than in 2019. Pension contribution for 2020 will be 612.19 PLN, disability contribution – 250.90 PLN, sick benefit contribution – 76.84 PLN, accident contribution – 52.37 PLN, and Labour Fund contribution – 76.84 PLN. There is also health contribution (which is tax-deductible), but the amount for 2020 is not yet known as it is calculated differently.

“The system is especially detrimental to small businesses. Adam Abramowicz, the Ombudsman for Small and Medium Entrepreneurs has already announced he is going to write a letter to Prime Minister concerning the issue.

Let’s take a look into the systems in other countries and finally change this pathological, sick, unjust and immoral system of lump-sum ZUS payments for entrepreneurs” – he said in an interview.

What This Means for Businesses in Poland

Tax policy changes in Poland have direct implications for both domestic and foreign-owned businesses. Companies operating in Poland must stay informed about regulatory developments to optimize their tax position and maintain compliance. The Polish tax system includes CIT (19% standard, 9% for small taxpayers), VAT (23% standard rate with reduced rates of 8% and 5%), and various sector-specific levies.

For international entrepreneurs and investors, understanding the Polish tax landscape is essential for business planning. Poland offers several attractive incentives including the Polish Investment Zone (up to 15 years of CIT exemption), R&D tax relief (up to 200% deduction), and the IP Box regime (5% effective CIT rate on qualified intellectual property income). Professional tax advisory can help identify the most beneficial structure for your specific situation.

The interplay between Polish domestic tax law and international tax treaties is particularly important for foreign-owned entities. Transfer pricing regulations, withholding tax provisions, and anti-avoidance rules (GAAR) require careful navigation to ensure both compliance and optimization.

If you are doing business in Poland or considering entering the Polish market, Zalewski Consulting can help. Learn more about our tax advisory services in Poland, or contact us for a free consultation.