Small ZUS on income - regulations in practice!

People running a business and achieving relatively low income can pay lower social contributions than before using the ZUS contribution scheme based on income. Not every entrepreneur can take advantage of the relief - in the article we explain the principles of reducing liabilities in the case of ZUS from income.

Not all may be relieved!

The preference for paying ZUS contributions on income for small businesses will apply to entrepreneurs who meet all of the following conditions:

• running the company in the previous year for a minimum of 60 calendar days,
• not providing services of the same nature as in full-time employment for the former employer.

The relief will not be used by entrepreneurs who settled in the form of a tax card and were exempt from sales from VAT and were subject to social insurance or health insurance also for other non-agricultural activities (e.g. as a partner of a general partnership). People who meet the conditions for paying preferential contributions, i.e. contributions on the declared amount not lower than 30% of the minimum wage, will also not benefit from the small ZUS plus plus.

Who can pay lower social contributions - income limit

The small ZUS plus relief is available only to selected entrepreneurs - those whose annual income in the previous calendar year did not exceed PLN 120,000, assuming that the activity was conducted for the entire year. Importantly, if the activity was only carried out for part of the year, then the limit that cannot be exceeded is correspondingly lower. The method of its determination is made by dividing PLN 120,000 by the number of calendar days of the previous year and multiplying the obtained result by the number of calendar days of conducting business activity in the previous calendar year. The obtained result should be rounded up to the nearest penny, if the ending is equal to or higher than 0.5 gr, or down, if it is lower.

Example 1.

Ms Magdalena runs a business, but until September 30, 2020 she was subject to KRUS. In 2020, she was subject to social insurance for running a business for 92 days. The limit that cannot be exceeded by its income from business activity is PLN 30,163.85, according to the calculation (120,000: 366) x 92 = 30,163.85.

How to determine the value of social security contributions under the new rules?

Entrepreneurs subject to the preference of ZUS contributions over income for small businesses may pay lower social contributions than before. The calculated basis for the assessment of insurance premiums and the value of the Social Insurance Institution premiums themselves will apply to the entrepreneur throughout the next calendar year, regardless of the income earned in the current year, which may be any higher or lower. We will establish the basis for contributions according to the following scheme:

annual non-agricultural business income

obtained in the previous calendar year

____________________________________________ x 30

number of calendar days of non-agricultural conduct

business activity in the previous calendar year

 

The result of the operation should be rounded to two decimal places. In the next step, the obtained number is multiplied by a constant factor of 0.5. The final result must be rounded to the nearest penny.

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Example 2.

Ms Anna meets the conditions for taking advantage of the small ZUS plus. Its annual income from business activity in 2020 amounted to PLN 46,234.25. It operated for 305 days. Thus, its average monthly income from business activity is 4,547.63 x 0.5 = 2,273.82 PLN - this is the contribution base in 2021.

The basis for the calculation of insurance premiums determined in this way should be declared by the entrepreneur on the information provided by ZUS DRA. It is also worth remembering to compare the obtained result with the amount of 30% of the minimum wage and 60% of the forecast average monthly wage. The basis for calculating contributions cannot be lower than 30% of the minimum remuneration for work in a given year and cannot exceed the amount of 60% of the forecast average monthly remuneration established for a given year.

The basis for calculating social security contributions for entrepreneurs paying contributions depending on income may not be lower than the minimum basis for the preferential ZUS provided for people starting business activity, i.e. 30% of the minimum remuneration for work in a given year.

During the period of using the small ZUS plus, i.e. contributions from income in individual months, insurance contributions must be paid on the basis of the assessment base determined in accordance with the above-mentioned rules or on a higher amount. However, it is worth remembering that the amount on which contributions were paid affects the amount of social insurance benefits, including sickness allowance, care allowance, maternity allowance.

ZUS contributions on income and the health contribution

The health insurance premium will not depend on your income. Still, the minimum basis for calculating health insurance contributions for all self-employed persons will be 75% of the average monthly remuneration in the enterprise sector in the fourth quarter of the previous year, including payments from profit. The value of the average monthly salary in the enterprise sector in the fourth quarter of the previous year will be announced by the Central Statistical Office in January of the following year.

Little ZUS plus in 2021

A person running a business who benefited from the small ZUS plus relief in 2020 and still wants to pay lower premiums in 2021 does not have to reapply for insurance.

On the other hand, a payer who wants to take advantage of the small ZUS plus only from 2021 must apply to the insurance with a code that starts with the numbers 05 90 or 05 92. However, if the entrepreneur paid ZUS until the end of 2020, the so-called regular, i.e. was reported with the code 0510 or 0512, and from 2021 he has the right to ZUS on income, he should make appropriate re-registration, i.e. deregister from the existing code (ZWUA form) and register under the code 0590 or 0592. Valid in in this case, the following deadlines for applications:

• until February 1, 2021, if:
• in 2020, business activity was conducted for at least 60 days and the small ZUS plus was not used;
• in January 2021, activities carried out in 2020 were restarted or business activities were resumed;
• within 7 days from the date on which the conditions for using small ZUS plus have been met, if:
• business activity was started or resumed after January 24, 2021;
• conditions were met in a month other than January 2021.

It should be remembered that in addition to the application documents, the payer who wants to use the small ZUS plus must also submit ZUS DRA part. II or ZUS RCA part. II.

How long can you use a small ZUS?

ZUS contributions for income for small businesses may be paid by the entrepreneur for a maximum of 36 months in the last 60 calendar months of running a business. In practice, this means that if a person running a business in subsequent years generates income that allows for the application of preferences, after three years of paying ZUS contributions on income for small businesses, it will be necessary - for the next two years - to pay social contributions corresponding to a large ZUS. There are no contraindications for the entrepreneur to use the preferences again after this time - as long as he continues to generate sufficiently low revenues from the activity.

Summary

Small ZUS is a solution dedicated to entrepreneurs who obtain lower income. The tax credit is granted for three years out of five years, and after that period it can be used again. Lower, proportional income contributions are a chance for significant savings while earning a seniority for retirement.