Communication 8/2017: "Mały ZUS" (option of reduced social security contributions) solves some but creates new problems
Synthesis
"Mały ZUS" (an option to pay reduced social security contributions) proposed by the Ministry of Development is beneficial to entrepreneurs with irregular income who currently have to pay the contributions even in no-income months. However, making revenue rather than income the basis for the computation of contributions means that many businessmen will not be able to take advantage of the new solution. This will be the case, for example, in commerce, where high revenue is accompanied by high costs.
High taxes and high contributions affect not only less-earning entrepreneurs but also employees. Selectively reducing the contribution for entrepreneurs, while leaving it unchanged for employees, will push some of the employees to switch to self-employment as more profitable. In the future, this could become yet another bone of contention for ZUS (Social Insurance Institution) and entrepreneurs.
What are the contributions paid by the self-employed at present?
The proposal of the Ministry of Development changes social security contributions, which form only a part of all tributes paid by entrepreneurs. In addition to social security contributions, they also pay contributions to the National Health Fund as well as PIT (personal income tax).
In the case of people running a business for more than two years, the minimum monthly premium is:
- 812,61 PLN - social security contributions:
- 499,28 PLN - pension contributions,
- 204,62 PLN - contribution to disability pension fund,
- 62,67 PLN - sickness insurance (this insurance and consequently this premium is not obligatory),
- 46,04 PLN - accident insurance, - 62,67 PLN - contribution to the Labor Fund,
- 297,28PLN - National Health Fund, of which 255 zł can be deducted from the personal income tax PIT (but in the case of entrepreneurs with incomes below 1500 PLN the tax will be too low to fully deduct the contribution)
- 18% - PIT (personal income tax). For small businesses with the lowest income, it is more profitable to choose taxation on a scale. At low income, they will be taxed 18% and will be able to use a tax-free amount that reduces taxes by up to 556 PLN per year.
Full communication by FOR (in Polish) available to download here.
You are welcome to contact our experts:
Aleksander Łaszek - Chief Economist at FOR
aleksander.laszek@for.org.pl
Rafał Trzeciakowski - Economist at FOR
rafal.trzeciakowski@for.org.pl
Files to download
