ZUS contributions on income - a new tax relief for companies


From 2019, entrepreneurs could benefit from the new ZUS tax relief on income. This relief, however, was heavily criticized. Disapproval voices emphasized that the amount of income was often inadequate to the actual income of entrepreneurs. From February 2020, Prime Minister Mateusz Morawiecki and the government implemented further changes in the calculation of contributions. The government wanted the basis for calculating contributions to be the entrepreneur's income, and it happened! Below we will explain the basic assumptions for paying the ZUS contribution on income.

Initial Income Contribution Relief Outline

The proposal to calculate contributions proportionally to income once aroused both joy and anxiety among entrepreneurs. At the initial stage of creating the assumptions for the new tax relief, the Prime Minister did not specify who the new regulations would apply to. There were articles on the Internet saying that everyone would pay ZUS contributions on income. This would mean a huge burden for people who earn the most from running a business. Fortunately, this type of unconfirmed information was quickly denied.

ZUS contributions on income, i.e. a small ZUS plus

The "ZUS contribution on income" relief entered into force on February 1, 2020, thus replacing the "income contribution" relief. Contributions from income, i.e. small ZUS plus, are available to entrepreneurs who:

  • in the previous year, they achieved revenues of no more than PLN 120,000 (if the activity was conducted during a year for less than 365 days, the specified limit should be reduced proportionally);
  • last year they operated for at least 60 days;
  • are not entitled to benefit from the "preferential ZUS contribution";
  • they do not work for the former employer;
  • they do not benefit from taxation in the form of a tax card, while being exempt from VAT pursuant to Art. 113 paragraph. 1 and 9 of the Value Added Tax Act.

Although the specific limits entitling to take advantage of the "small ZUS plus" relief refer to the amount of income, the same calculation of the ZUS contribution base is based on the amount of income earned by the entrepreneur in the previous calendar year. In practice, this means that entrepreneurs taking advantage of this relief will pay ZUS contributions calculated on individually defined grounds. On the other hand, the law takes into account the possibility of paying higher than minimum social security contributions.

Act on the social insurance system (Journal of Laws 1998 No. 137 item 887)

Art. 18c. 8. The insured referred to in sec. 1, may declare as the basis for the assessment of contributions to the retirement and disability pension insurance an amount higher than the basis for the assessment of contributions to the retirement and disability pension insurance determined in accordance with this article.

Income contribution application

Applications to start paying ZUS contributions on income should be made in the same way as for other types of insurance, i.e. on the ZUS ZUA declaration. As the conditions indicate that, as a rule, entrepreneurs who already run a business can take advantage of the relief, in the first place, it is necessary to deregister from the existing insurance on the ZUS ZWUA declaration with the insurance title code, which was binding on the entrepreneur until the transition to income premiums. Then you have to re-apply for insurance on the ZUS ZUA declaration with the code 05 90/05 92.

Applications for joining income contributions should be made by the end of January 2021, if the scheme is to be changed from the beginning of the year. However, if the insurance premium scheme is changed during the year, the entrepreneur should report within 7 days from the date of changing the insurance obligation.

Example 1.

Mr. Kowalski has been running the company for 5 years. He has been paying full ZUS contributions for a long time. In 2020, due to the pandemic, its activity was very limited and the revenue for 2020 did not exceed PLN 120 thousand. zloty. Thus, from January 1, 2021, Mr. Kowalski wants to take advantage of the income contribution relief. To do this, he must report to ZUS on the ZUS ZUA declaration by January 31, 2021 at the latest.

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Example 2.

Ms Nowak started her business in 2018. First, she used a 6-month tax relief for new companies (she only paid the health insurance premium), and then 24 months of preferential ZUS contributions. Thus, in 2021, it should switch to full ZUS contributions. However, due to the fact that its activity has not developed sufficiently yet, in 2020 its revenue did not exceed PLN 120 thousand. income. Thus, Ms Nowak decided to take advantage of another relief, which is income contributions, because she meets all the other conditions. Ms. Nowak reported on the ZUS ZUA declaration to social insurance with the code 05 90 and submitted the declaration within 7 days from the date of expiry of the right to pay preferential contributions.

A very important issue related to the application for income contributions is the situation when the entrepreneur has overlapping insurance titles. For example, when, in addition to running a business, an entrepreneur is employed on the basis of an employment contract (he receives a salary equal to or higher than the national minimum wage), he is exempt from paying social contributions for the activity and pays only the health insurance contribution. However, if he plans to terminate the employment contract during the year and would like to take advantage of the payment of contributions on income, then it will only be possible if he applied for insurance with the code 05 90/05 92 by the end of January this year. year in this case will be impossible.

Example 3.

Mr. Kowalczyk has been running a small business for many years and combines it with a full-time job. The scope of activity and employment contract is completely different. Mr. Kowalczyk is registered for health insurance with the code 05 10, because his remuneration under the employment contract is higher than the national minimum. The employment contract ends at the end of May and the employer has announced that it will not be extended. Therefore, Mr. Kowalczyk, wishing to take advantage of the income contribution relief from June 2021, by the end of January 2021, should re-register from code 05 10 to code 05 90 - still, of course, on the ZUS ZZA declaration applying for health insurance. After the end of the employment contract, Mr. Kowalczyk should deregister with the code 05 90 on the ZUS ZWUA declaration and report to pay social contributions with the code 05 90, but on the ZUS ZUA declaration.

ZUS contributions on income - new year, new contribution basis

People running a business who in the previous 2020 benefited from the income contribution relief and still meet the conditions for benefiting from the reduction in ZUS contributions, may continue to pay lower liabilities. However, since the amount of the contribution is calculated on the basis of the income earned in the previous year, at the beginning of the next year, the ZUS contribution base should be recalculated (based on the income earned in the previous year).

Demonstration of the income contribution base in the ZUS DRA declaration

After determining the new basis for ZUS contributions, this information should be included in the reports submitted to ZUS. In the first ZUS DRA declaration submitted to ZUS with the calculation of contributions from the new basis, a completed ZUS DRA report, part II (or ZUS RCA part II - if other insured persons are included in the reports) with the new ZUS contribution base determined for a given year.

ZUS DRA part. II or ZUS RCA part. II is submitted to ZUS only once a year, together with the first ZUS DRA declaration showing the accrued ZUS contributions from the new contribution base established for a given year.

The new solutions of the government were perceived by entrepreneurs in two ways. On the one hand, people with the lowest income have the opportunity to actually save on ZUS contributions using the newly introduced tax relief, and on the other hand, the lack of some ZUS receipts may have a significant impact on the wallets of all Poles in the long term. Many entrepreneurs hoped that the condition for joining the tax relief would be to obtain a certain income threshold, which would allow them to take advantage of this preference. Unfortunately, this did not happen and the income threshold is still the main criterion. Thus, many industries whose actual incomes are small (and their revenues are significant) cannot benefit from this relief.