On March 19, 2024, the Polish government approved a bill to amend the social insurance system law and some other laws prepared by the Ministry of Development and Technology.
This amendment aims to introduce so-called ZUS (Polish social insurance institution) contribution holidays from October 1, 2024, for the smallest businesses (micro-enterprises), which involves exemption from paying ZUS contributions for one selected month each year.
The government estimates that about 1.7 million people will take advantage of this opportunity within the current year.
This article provides essential information on ZUS holidays, focusing on the legal framework, eligibility criteria, and the implications for entrepreneurs conducting their business in Poland.
What Are the ZUS Holidays?
ZUS holidays are a financial relief measure intended for entrepreneurs running sole proprietorships. Under this plan, they can skip paying contributions for mandatory social insurance for a month once a year.
This optional benefit is available to all micro-entrepreneurs (including the self-employed) registered in the CEIDG.
What do ZUS contribution holidays entail?
A micro-entrepreneur can choose any month of the year to not pay ZUS contributions, the Labor Fund, and the Solidarity Fund contributions. The government budget will cover the contributions for that month
Who is considered a micro-entrepreneur?
The status of a micro-entrepreneur is assigned to entrepreneurs who have met the following criteria simultaneously in at least one of the past two fiscal years:
- Employed an average of fewer than 10 employees annually
- Achieved an annual net turnover from the sale of goods, products, services, and financial operations that did not exceed the equivalent of 2 million euros in Polish zloty, or the total assets on their balance sheets prepared at the end of one of those years did not exceed the equivalent of 2 million euros in Polish zloty.
What are the limitations of ZUS Holidays?
It’s important to note that this relief does not include health insurance contributions, which means:
- Entrepreneurs who opt for the contribution holidays must continue to pay health insurance contributions for the chosen month
- The amount of health insurance contributions remains unchanged
- The deadline for health insurance contributions will not change.
Another limitation arises when the basis of contribution assessment previously declared by the entrepreneur is higher than the lump sum for the given year. In such cases, during the month when the individual benefits from the proposed solution, the state’s financial support will be reduced to the lowest applicable assessment base for that insured person.
It’s worth noting that while benefiting from this relief, the entrepreneur is not required to suspend their business operations, meaning they can continue to generate revenue.
The exemption is intended to serve as public aid implemented under the de minimis rule. This implies that entities that have already reached their de minimis aid limit will not be eligible for the contribution holidays.
Contribution holidays are also to be available for individuals working under B2B agreements, but there is an exception – it does not apply to individuals who have performed or were performing activities in the previous calendar year for their former employers. This restriction aims to prevent the so-called pushing of employees into self-employment. However, this limitation does not apply if the services provided do not overlap with the activities previously carried out as an employee.
Importantly, the contribution holidays pertain only to the entrepreneur themselves, not to individuals insured by them, such as employees.
The Ministry of Development explains that this restriction is aimed at preventing the phenomenon of “pushing employees into self-employment,” which occurs when employers force their employees to quit their job contracts and start a business to avoid employment obligations.
ZUS Holidays and Tax Treatment
Good news for micro-entrepreneurs – they can benefit from “contribution holidays” regardless of their chosen method of income tax settlement. This includes:
- PIT: Individuals settling taxes under general, flat rate, or lump sum income tax on business revenue.
- Lump sum on business revenues: Those who have opted for this simplified tax form.
- Tax card: Individuals who settle taxes in this manner.
The Ministry of Development states that the relief in the form of “contribution holidays” applies solely to the entrepreneur’s social insurance contributions and does not cover individuals insured by the entrepreneur.
Applying for ZUS Holidays
To take advantage of this relief, it will be necessary to submit an application to ZUS. The application must be submitted in the month preceding the selected “contribution holiday” month. A detailed application form and instructions will be available on the ZUS website.
The Polish Prime Minister announced that this year entrepreneurs will be able to take advantage of ZUS rest holidays. He expressed confidence that within the next four months, the Social Insurance Institution will sort out IT issues to make this option available to entrepreneurs. However, he emphasized that applications for leave must be submitted by the end of November.
It is important to follow further announcements from ZUS and the government regarding the details of this new benefit.
Conclusion
In conclusion, the introduction of ZUS holidays by the Polish government is a significant development for micro-entrepreneurs across Poland. Starting from October 1, 2024, this initiative offers a practical benefit allowing eligible entrepreneurs to opt out of paying specific social insurance contributions for one month each year. Although the plan does not cover health insurance contributions, it provides substantial financial relief, potentially enhancing the liquidity and operational flexibility of small business owners.
Adwisen offers you professional assistance with applying for the ZUS Holidays relief.
