Starting a business in Poland results in a lot of opportunities as well as regulatory obligations, one of which includes participating in the compulsory social insurance system. As an entrepreneur, understanding these requirements is not just about compliance – it’s about smart planning and management. Here’s an essential guide to help you understand the complexities of Polish social insurance.
What Are the Compulsory Social Insurances?
In Poland, compulsory social insurance is a statutory requirement for entrepreneurs and their employees, aimed at providing financial security in cases of sickness, maternity, disability, old age, and accidents at work. These insurances are managed by the Social Insurance Institution (Zakład Ubezpieczeń Społecznych, ZUS). Participation in this system is not optional but a legal obligation for most types of business activities.
Key Components of the System
- Pension insurance (emerytalne) – accumulates funds for your retirement. Both employers and employees contribute to this fund. As an entrepreneur, you are responsible for your contributions as well as deducting and remitting your employees’ shares
- Disability insurance (rentowe) – covers the insured in the event of disability caused by illness or accident. It ensures financial support if the work capacity is lost
- Sickness insurance (chorobowe) – provides cover for income lost due to temporary inability to work due to illness. Opting for sickness insurance is mandatory for employees but optional for business owners
- Accident insurance (wypadkowe) – specifically designed to provide benefits to employees who suffer from work-related accidents or diseases. The rate varies depending on the risk associated with the type of work
- Health insurance (zdrowotne) – while technically separate from the social insurance system and managed by the National Health Fund (NFZ), it is compulsory and closely linked. It provides access to medical services
Which Entrepreneurs Have To Pay Contributions To the Social Insurance Institution (ZUS)?
- An entrepreneur registered with CEIDG including a partner in a Civil Code partnership
- A partner in a single-member limited liability company
- A partner in a general partnership, limited partnership, or in a partnership
- A shareholder in a simple joint-stock company who contributes to the company, in the form of the provision of labor or services
- A general partner in a limited joint-stock partnership
- A freelancer
- A creator or an artist.
Exception- concurrence of insurance (having other titles to insurance) e.g. working as a full-time employee.
An entrepreneur may start a business activity on the day of applying for entry to business activity records, except where the provisions of the Act make starting and running a business activity dependent on obligations obtaining a license or permit by the entrepreneur.
A person conducting non-agricultural activities is subject to compulsory insurance social: retirement, disability, and accident insurance, from the date of commencement conducting business activities until the date of cessation of this activity, excluding the period for which the activity was performed suspended under the provisions of the Act on the social security system) and the provisions of the Entrepreneurs’ Law. The sickness insurance is voluntary.
Contribution Rates and Obligations
The basis for calculating social security contributions in 2024 for a sole proprietorship is the declared amount, not lower than PLN 4,694.40 (60% of the forecast average monthly salary).
The amount of the forecast average salary in 2024 is PLN 7,824.
For January – December 2024, the social security contribution of persons listed in group II cannot be lower than the amount:
- PLN 916.35 /i.e. 19.52%/ – for pension insurance
- PLN 375.55 /i.e. 8%/ – for disability insurance
- PLN 115.01 /i.e. 2.45%/- for sickness insurance.
What are the ZUS Contributions During the Suspension of Your Business?
During the suspension of your business activity, you do not pay contributions because you are not covered by ZUS insurance.
Before you apply to suspend your business activity, consider what date you want to do it. If you suspend your business during the month, you will have to pay:
- Health insurance premium for the entire month
- Social security contributions in proportion to the number of days on which your business was active in a given month – during the suspension period, which lasts for part of the month, the amount of the lowest basis for assessing contributions is reduced proportionally by dividing it by the number of calendar days of the month and multiplying it by the number of days you are subject to insurance.
The right to health services expires 30 days after the end of the period of health insurance coverage. Therefore, if you want to have the right to health services during the suspension period, you should voluntarily apply for insurance from the National Health Fund (if you are not insured under another title, e.g. an employment contract or mandate).
Contribution Reliefs for People Starting a Business
New business owners can benefit from social security contributions reliefs, such as “Ulga na Start” (“Start-up relief”), preferential contributions, or “Mały ZUS Plus” (“Small ZUS Plus”). However, it is essential to know that those reliefs don’t apply to health insurance.
“Ulga na Start”
If you are a beginner entrepreneur, you can benefit from a start-up tax relief. For the first 6 months of running a business, you can benefit from exemption from social security contributions (i.e. retirement, disability, and accident insurance contributions). A decision to take advantage of the reliefs will affect the amount of benefits a person is entitled to (sickness, disability, pension). By paying lower premiums today, a person will receive lower benefits in the future.
Who can benefit from the start-up relief?
- A natural person (i.e. you run a sole proprietorship or a partner in a civil partnership)
- People starting a business activity for the first time or starting it again after at least 60 months from the date of its last suspension or termination
- People not carrying out activities for a former employer for whom they worked full-time in the current or previous calendar year and performed activities falling within the scope of their current activity
- People not insured by KRUS (social security institution dedicated to farmers).
Preferential ZUS Contributions
After 6 months of using the start-up relief, you still do not have to pay the full amount of social security contributions. You have the opportunity to take advantage of an already existing solution, i.e. preferential ZUS contributions.
This means that for the next 24 months, the basis for calculating contributions will be the declared amount, which cannot be lower than 30% of the minimum wage.
From January 2024, the base cannot be lower than PLN 1,272.60, and contributions amount to PLN 402.65.
“Mały ZUS Plus”
If you run a business based on an entry in CEIDG and your revenues in the previous year did not exceed PLN 120.000, you can take advantage of the “Mały ZUS Plus” relief.
This means that for a maximum of 3 years within 5 years, you will pay social security contributions proportional to the income obtained in the previous year. The lowest contribution basis in this case is 30% of the minimum wage. It cannot exceed 60% of the forecast average salary, i.e. the amount appropriate for full ZUS contributions.
What about conducting temporary business activity in Poland?
If your business is based in a member state of the European Union, the European Economic Area, or Switzerland, and you are temporarily conducting business activities in Poland, you are not required to register with the Polish social insurance system.
The A1 form serves as proof that Polish social insurance regulations do not apply to you. This form is issued by an institution similar to the Polish Social Insurance Institution (ZUS) in your home country, where your business is primarily established. It indicates the duration for which you are covered under your home country’s social insurance legislation.
Voluntary social insurance
Coverage by voluntary insurance: pension, disability, and sickness insurance takes effect from the date indicated in the ZUS ZUA registration, but not earlier than the day on which this registration was submitted to ZUS.
Furthermore, coverage by voluntary sickness insurance takes effect from the date indicated in the ZUS ZUA registration, provided that registration for mandatory pension and disability insurance is made within 7 days from the onset of the obligation of these insurances.
In the case of individuals conducting business activities, coverage by voluntary sickness insurance can take effect from the date indicated in the registration, provided that registration for mandatory pension and disability insurance is completed by the end of January of the given year, if the business activity was started or resumed in January and the person benefits from “Small ZUS Plus”. However, if there are less than 7 days left until the end of the month – within 7 days.
Managing Your Contributions
Managing your social insurance obligations requires diligent administration. Ensure that you:
- Register yourself and any employees with ZUS when you start your business or hire
- Regularly update your earnings information to ZUS, as this impacts your contribution rates
- Make timely payments to avoid penalties. The deadlines are strictly enforced.
Conclusion
Understanding and managing compulsory social insurance in Poland can be challenging but is crucial for running a successful business. While this guide provides a foundation, staying informed about the latest changes in legislation is essential.
Consider consulting with a legal expert specializing in Polish business law to tailor your approach to compliance. This proactive step can safeguard your business against unforeseen liabilities and ensure smooth operational flow. Adwisen offers you professional assistance every step of the way.
