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28 November 2019

Small ZUS-plus from February 1st, 2020

Under the common name of Small ZUS, there is a project of social benefits for small enterprises. Small ZUS-plus extends those regulations, primarily by increasing the qualification annual income threshold for companies to 120,000 PLN. As a result, more enterprises will benefit from a reduction in social security contributions. The regulations will enter into force at the beginning of February, 2020.

Small ZUS-plus – who will benefit?

The Small ZUS-plus project raises the qualifying threshold from 63,000 PLN revenue (effective from the beginning of 2019 as a part of the primary Small ZUS project) to the value of income not exceeding 120,000 PLN annually. A change from revenue to income in the threshold is significant – it helps to increase the probability that only the necessitous small companies will benefit from the regulations. The amount of reduction will be calculated proportionally to the company’s monthly income. According to the government’s calculations, entrepreneurs can expect their social contribution lowered by up to several hundred PLN per month.

The law also provides for exceptions to the qualifying rule. Small ZUS-plus will not affect those entrepreneurs who use the VAT exemption or settle using a tax card – due to difficulties in calculating the contribution basis. Also, companies paying ZUS under 24-month preferential contributions have been excluded because the rate reduction will not be beneficial for them. Furthermore, the reduction will not be available to entrepreneurs performing services for their former employers (due to the risk of mass transfers to self-employment).

Small ZUS 2020 – project details

it is worth keeping in mind that the reductions only apply to social insurance: retirement, sickness, disability and accident insurance. The new regulations do not cover health insurance – its amount will remain unchanged, regardless of the company’s annual income. The reduction will apply for a maximum of 3 years (36 months) over 5 years of doing business.

Gains for entrepreneurs – losses for the budget

One thing is certain. The expansion of Small ZUS has not been implemented to repair the state budget. The estimated losses for the State Treasury equals 1,3 billion PLN in 2020 alone (with a probable increase over the next few years). The government anticipates that nearly 300,000 companies will benefit from the Small ZUS-plus regulations.

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