High ZUS contributions are a nightmare for entrepreneurs – the obligation to pay them unfortunately also affects small companies, sole proprietorships, and new entrepreneurs who are just starting their business. Various types of reliefs, including Small ZUS Plus, were created with them in mind. What does this relief entail, who can benefit from it, and how to take advantage of an additional 12 months of lower contributions?
What is Small ZUS Plus?
Small ZUS Plus is a discount on social security contributions. It is aimed at the smallest businesses. Small ZUS Plus has been in effect since 2020, and companies can benefit from it for 36 months, which is 3 years out of 60 months of conducting business, or 5 years. The condition for using the Small ZUS Plus discount is an annual income in the previous calendar year not exceeding 120,000 PLN and conducting business for at least 60 days. This means that companies can use this discount for 3 years out of 5 years of operation, so after those three years, they have to pay full contributions for the next two years, and then they can again benefit from the discount for the next 3 years, and so on. This is undoubtedly a very helpful solution for small businesses that do not generate high revenues, including sole proprietorships.
What do you need to do to take advantage of Small ZUS Plus?
Companies that meet the above-mentioned revenue and business operation time criteria can apply for the Small ZUS Plus until the end of January. However, if someone stops paying the preferential ZUS contributions during the year or resumes or re-establishes business activity, they should report it within 7 days of the occurrence of these situations. When benefiting from the Small ZUS Plus, one must provide the Social Insurance Institution (ZUS) with information regarding the annual revenue from non-agricultural business activity and the basis for calculating contributions, similar to the case of preferential contributions.
In addition, when paying the Small ZUS Plus, one must also provide ZUS with data regarding income and taxation form. These details can be submitted in a personalized monthly report or in a settlement declaration. Therefore, there is no need to fill out and submit any new documents. Unfortunately, while benefiting from the Small ZUS Plus, one cannot settle taxes in the previous year using the Tax Card while simultaneously being exempt from VAT tax payment. It is also not allowed to perform activities for former employers, which is intended to prevent sending full-time employees into self-employment.
Additional Small ZUS Plus from August 1, 2023
From August 1, 2023, entrepreneurs using the Small ZUS Plus can extend their use of this relief for an additional year. However, this applies only to entrepreneurs who used the relief in at least one month of 2023. This is a voluntary and one-time solution offered to the smallest businesses that did not exceed PLN 120,000 in revenue in the previous year. Entrepreneurs who ended their use of the Small ZUS Plus in 2023 due to the expiration of 36 months can also take advantage of this option. If they meet all the conditions described in the law, they can express their desire to extend the Small ZUS Plus until December 31, 2023. Unfortunately, entrepreneurs who ended their contributions under this relief in 2022 cannot benefit from the additional year of relief.
What conditions need to be met to benefit from the additional Small ZUS Plus?
In order to benefit from the additional Small ZUS Plus relief for an additional 12 months, besides meeting the conditions regarding revenues and the duration of conducting business activity, an additional condition regarding the amount of the contribution base within the framework of the Small ZUS Plus must be met. It cannot be higher than 60% of the forecasted average monthly remuneration for the given year, but also cannot be lower than 30% of the minimum wage in force for the given year. In 2024, the minimum wage will be 4242 PLN from January and 4300 PLN from July.
Therefore, the contribution base of the entrepreneur wishing to benefit from the additional Small ZUS Plus must be between 30% of these amounts and 60% of the forecasted average remuneration, which is expected to be 7794 PLN in the following year. It is also important to note that no additional formalities or additional documents and forms need to be submitted. However, in subsequent years of using the Small ZUS Plus, entrepreneurs will be required to verify whether they still meet the conditions stipulated in the law, mainly concerning the revenues earned, and determine the income from the previous year, which is necessary to calculate the contribution base, the amount of which is also important for the continued eligibility for the Small ZUS Plus relief.
Small ZUS Plus – a bit of statistics
Statistical data from December 2022 indicate that 235.7 thousand entrepreneurs were benefiting from Small ZUS Plus at that time. Regarding the additional Small ZUS Plus, it is estimated that in 2023, 66.4 thousand companies will take advantage of this opportunity, in 2024 it will increase to 142.3 thousand, and in 2025 slightly fewer, at 104.9 thousand companies.
Social security contribution reliefs in order
The Small ZUS Plus is not the only relief on ZUS contributions that entrepreneurs can benefit from. New companies are initially exempt from paying social security contributions and only pay a health insurance contribution. The exemption from social security contributions applies for 6 months from the start of the business. Afterwards, for the next two years, they can benefit from reduced, so-called preferential ZUS contributions. After these two years, the smallest companies that meet the conditions related to income or the base for calculating contributions can cyclically benefit from the Small ZUS Plus. These solutions can undoubtedly provide some support for beginners and small businesses whose incomes do not allow them to pay contributions at the normal rate. As a result, small and new companies can also fulfill this obligation.