Polish government has introduced a solution that allows entrepreneurs to take advantage of so-called contribution holidays.
This solution is intended for entrepreneurs who, after meeting certain conditions, will be able to apply to ZUS for exemption from paying contributions for mandatory pension and disability insurance, accident insurance, sickness insurance (if previously declared), as well as contributions to the Labor Fund and Solidarity Fund for a selected calendar month each year. Social insurance contributions for the given month will be financed by the government budget, and the entrepreneur will maintain insurance continuity.
The regulations will come into effect on November 1, 2024, and entrepreneurs will be able to take advantage of the holidays as early as December of that year (assuming the appropriate application is submitted to ZUS in November). This will be a voluntary relief, and entrepreneurs can decide whether they want to use it. There will also be the option to choose the timing of when the relief is utilized. To take advantage of the holidays, the entrepreneur will be required to submit an electronic application available on the ZUS profile. The application must be submitted in the month preceding the month for which the relief is requested.
Importantly, the exemption from paying contributions will not apply to health insurance contributions, which must be paid in full by the taxpayer.
Conditions to be met to take advantage of contribution holidays
The proposed solution is targeted at entrepreneurs registered in the CEIDG who:
- In the calendar month preceding the month of application submission, had no more than ten insured persons (including themselves) registered for social insurance; the limit does not include persons on unpaid leave for the entire month or those on maternity or parental leave if they remained on such leave for the given month (or longer);
- In the last two calendar years preceding the year of application submission, did not achieve income from non-agricultural business activities, or in at least one of the two calendar years preceding the year of application submission, achieved annual income from non-agricultural business activities not exceeding the equivalent of 2 million euros in PLN;
- As insured persons in the calendar year preceding the year of application submission and in the period from the beginning of the calendar year of application submission to the day of application submission, did not perform non-agricultural business activities for a former employer;
- In the calendar month preceding the month of application submission, were subject to pension, disability, and accident insurance due to non-agricultural business activities.
The exemption will constitute public aid implemented in a de minimis format, meaning that an entrepreneur utilizing the proposed relief must have a de minimis aid limit at least equal to the sum of the contributions subject to the exemption.
PwC Comment
The introduction of a relief in the form of a periodic reduction in the costs of running a business will contribute to the financial relief of entrepreneurs. Depending on the amount of contributions paid for their own social insurance and (potentially) the Labor Fund and Solidarity Fund in a given period, an additional amount may remain in the taxpayer's pocket (up to PLN 1,600.32 in 2024). Entrepreneurs who are granted the exemption will effectively receive an increase in disposable income, which may contribute to increased financial liquidity of their business operations.
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