On 7 December 2017, the Polish Senate adopted the law cancelling the upper limit of ZUS social security premiums. But it extended the vacatio legis for the new regulations which will enter into force only as of 1 January 2019.

The amendment cancels the upper limit of premiums for pension and disability insurance. According to the current regulations, the annual base for calculation of premiums for pension and disability insurance in a given calendar year may not be higher than the amount corresponding to 30 times the forecasted average remuneration in the economy for a given year. In 2017 it is PLN 127,890.

The law envisages cancellation of the limit so that all insured persons pay full premiums for ZUS social security, regardless of their income. Premiums for pension and disability insurance will be paid on the entire income, as in the case of sick and accident insurance. The same rule will apply for premiums paid by the employer for employees working in special conditions for the Bridging Pension Fund.

The entry of the proposed amendments into force means that persons earning more than 2.5 times the national average will have to pay higher premiums, calculated on their entire remuneration. So the adoption of the above solution will result directly in increasing the burden of premiums for the top earners, and therefore in decreasing their real remuneration (on an annual basis) as well as in an increase of costs for the employer in this regard.

At present the law is waiting to be signed by the President. If it is signed by the President and published in the Journal of Laws, it will come into force on 1 January 2019. It means that the principles for calculation of premiums for pension and disability insurance as regards their maximum calculation basis in the period from 1 January to 31 December 2018 remain unchanged.

Rafał Mielko, Tax Consultant, ATA Tax Sp. z o.o.