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The Ministry of Development plans to lower social insurance contributions for micro-entrepreneurs

2017-04-25

A proposal of the Act amending among others the Act on the Social Security System, announced by the Ministry already at the beginning of April, was finally published on the website of the Government Legislation Centre. The main objective of the legislator is to reduce the burden of social insurance contributions for entrepreneurs with low revenues.

The proposal assumes new reduced social insurance contributions (for pension and disability insurance) for those entrepreneurs whose monthly revenues are not in excess of 2.5 times the minimum remuneration (at the moment it would be PLN 5,000), and the annual revenues are not in excess of 30 times the minimum remuneration (currently PLN 60,000).

The basis for contribution calculation is to be dependent on revenues earned by the entrepreneur from the pursuit of business activity. At the moment social insurance contributions, regardless of revenues earned, are fixed and amount to PLN 812.61 (with voluntary sickness insurance) and PLN 794.94 (without sickness insurance). The proposal of the amending law assumes that by 30 November each year the minimum monthly basis and the minimum annual basis for pension and disability contribution calculation for the following year will be established by way of an executive regulation, corresponding to particular ranges of revenues from the pursuit of non-agricultural activity. So in practice, after the amendments have been implemented, contributions corresponding to the given amount of revenues will be fixed for the given range of revenues earned by the taxpayer. As stated by the Ministry of Development, the contribution is to go up by PLN 32 for every PLN 200 of revenues, thus amounting to:

Revenues amount

Contributions amount

PLN 0 - 200

PLN 32

PLN 200.01 - 400

PLN 64

PLN 400.01 – 600

PLN 96

PLN 600.01 – 800

PLN 128

PLN 800.01 – 1,000

PLN 160

….

PLN 3,600.01 – 3,800

PLN 608

PLN 4,800.01 – 5,000

PLN 800

The new regulations will not apply to persons who pay lump-sum tax in the fixed amount (karta podatkowa).

Although persons who meet the conditions for being covered by the proposed regulations will pay the contributions obligatorily pursuant to the amended regulations, nevertheless they will be able to declare the amount higher than the minimum one as the monthly contribution calculation basis. At the same time, those persons who will satisfy the conditions for the so called “small ZUS” will have an option whether they want to take advantage of the preferential contribution calculation basis for those commencing business activity or the calculation basis laid down by the new regulations.

The information published by the Ministry of Development indicates that the number of businesses eligible for reduced contributions will be about 325,000 out of which circa 200,000 do not apply at the moment the preferential contributions for entities in the initial phase of operation. This is the group of entrepreneurs who will benefit from the amendments.

The new regulations are to apply as of 1 January 2018.