Economic activity and insurance in KRUS - tax limit

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Pursuant to Art. 5a paragraph. 1 of the Act of 20 December 1990 on the social insurance of farmers (Journal of Laws of 2017, item 2336), a farmer may still be subject to insurance (KRUS) under this act, despite the fact that he decided to engage in non-agricultural economic activity, in a situation where the following circumstances occur:

  • should be insured under the aforementioned Act for an uninterrupted period of 3 years;

  • should, within 14 days from commencing other business activity, submit a letter confirming his willingness to continue insurance in accordance with the above Act;

  • both activities (agricultural and non-agricultural) should be continued by the farmer, but the farmer cannot be employed under an employment contract or other business relationship;

  • a farmer cannot be a pensioner or have established rights to social insurance benefits;

  • the income tax limit for the previous tax year on revenues from other business activities should not exceed PLN 3,376 in 2018.

Pursuant to Art. 5a paragraph. 10 of the above Act, non-agricultural economic activity is considered to be non-agricultural economic activity conducted in the territory of the Republic of Poland by natural persons on the basis of the provisions on freedom of economic activity, with the exception of partners of commercial companies and persons engaged in professional activities.

What in the case of conflicting insurance titles?

As a rule, agricultural insurance is excluded in conjunction with another insurance title. Thus, this different insurance title "precedes" agricultural social insurance in the event of different insurance titles. For example, being subject to social insurance in the general system under a mandate contract will take precedence over agricultural insurance. It is worth noting, however, that a farmer may be subject to agricultural social insurance and, at the same time, to social insurance for running a business, provided that certain conditions are met:

  • shall submit a declaration on continuing social agricultural insurance at the KRUS fund within 14 days of commencing business activity. Failure to meet this deadline will result in the termination of agricultural social insurance;

  • by May 31 of each year, he should obligatorily inform KRUS about the amount of income tax due for the previous year on revenues from his business activity (in the form of a declaration with the amount provided or a certificate of the amount of tax of the competent head of the tax office). However, the income tax limit specified in the act may not be exceeded.

Therefore, the timely submission of the certificate and the amount of the due income tax affect the type of insurance that the farmer will be covered by in the next settlement period.

A farmer should remember that a letter confirming the fact that the amount of income tax resulting from conducting other (non-agricultural) economic activity determined in the amount of PLN 3,376 (2018) should be submitted to the Fund by May 31 of each tax year (Article 5a (4) of the above-mentioned of the Act).

It should be indicated that in the event that a farmer does not submit a declaration of being subject to insurance under the above Act within the specified period (14 days from the commencement of non-agricultural economic activity), it will result in the termination of insurance under the Act on Farmers' Social Insurance (Article 5a (5) of the above Act. ).

If the farmer fails to submit a certificate to KRUS on the date of the tax or exceeds the tax amount indicated in the act as above, the agricultural insurance will cease.

Pursuant to Art. 5a paragraph. 6 of the above Act, failure to comply with the deadline for submitting the above-mentioned certificate means that the insurance under the above Act ends on the date on which the deadline for submitting the statement in connection with the commencement of non-agricultural business activity has expired.

Example 1.

Mr. Zygmunt, who has been a farmer for 10 years, started his non-agricultural business activity on February 1, 2018. Within 14 days, he should submit a declaration to the Fund on continuing insurance under the Act on social insurance for farmers. Therefore, if he does not meet the indicated deadline, then from February 15, 2018, the insurance under the Act on the social insurance of farmers will cease. The exception to the above will be the permanent termination of non-agricultural activity within 14 days of its commencement.

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Tax limit amount and change of insurance

It is worth pointing out that the tax amount in 2018 is PLN 3,376. If the threshold for business tax is exceeded, you will need to change your insurance title. Then the farmer will be the payer of social security and health insurance contributions. Within 7 days from the date on which the obligation of general insurance arises, the farmer will have to submit to the relevant ZUS (Social Insurance Institution) forms appropriate for insurance application, i.e. the ZUS ZFA form and the ZUS ZUA form. Additionally, in this case, the farmer will have to pay obligatory contributions for retirement, disability, accident and health insurance, as well as the Labor Fund.

Example 2.

Ms. Jolanta Nowak has been a farmer for 15 years and pays contributions to KRUS for this. On December 1, 2017, she started her business activity. Ms. Jolanta should submit a declaration to the KRUS cash desk on the continuation of agricultural social insurance by December 14, 2017, moreover, she should remember to submit an income tax declaration for business activity by May 31, 2018.

Example 3.

Mr. Zenon Zieliński has been a farmer for 4 years. He did not submit a declaration of income tax due to KRUS by May 31 and soon received a decision from KRUS excluding him from agricultural insurance from June 1, 2018. Mr. Zenon, despite being excluded from social agricultural insurance, will be able to take advantage of more favorable conditions for paying contributions to ZUS for 24 months, due to the commenced non-agricultural business activity. However, he must remember to pay health and social insurance contributions.

Agricultural social insurance (KRUS) in conjunction with insurance under the contract of mandate

It is worth mentioning that Art. 5b paragraph. 1 of the above Act applies to a farmer (household member) who is subject to agricultural insurance to the full extent under the Act, has been covered by other social insurance due to the performance of an agency contract or contract of mandate or another contract for the provision of services, is still subject to this insurance during the performance of the contract. Therefore, it is a person who met all the conditions for being covered by social insurance for farmers under the Act, and therefore would have been subject to this insurance had it not been for the obstacle in the form of being subject to social insurance for the performance of a civil law contract with income specified by the legislator. In other words, the option of staying in agricultural insurance has been provided for people who, under the Act, perform, in parallel with running agricultural activity that justifies the coverage of farmers with social insurance, as additional work on the basis of a mandate contract (or, respectively, an agency contract or other contract for the provision of services, until which, according to the Civil Code, the provisions on the mandate apply) (see the judgment of the Supreme Court of March 14, 2017, file reference number III UK 90/16).

Therefore, if the farmer does not exceed the tax limit, he is still subject to agricultural social insurance. Of course, he may withdraw from the insurance at any time by submitting a declaration of withdrawal from this insurance to the Fund, but not earlier than from the date on which the declaration was submitted to the Fund (Article 5b (2) of the above Act).

In conclusion, a farmer running a non-agricultural business and agricultural activity or permanently working on a farm is subject to agricultural social insurance and general insurance. However, if the farmer wants to be covered by both types of insurance, he should remember to meet certain conditions:

  • submitting a declaration on continuing agricultural insurance in KRUS within 14 days from the commencement of non-agricultural business activity;

  • timely submission of income tax declarations.

If the annual amount of income tax is exceeded (in 2018 it was PLN 3,376), social agricultural insurance will be terminated.