What changes have the Business Constitution introduced?

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As part of the Business Constitution, five laws simplifying and organizing economic turnover in Poland have entered into force. Entrepreneurs can take advantage of numerous solutions that make it easier to start a business and then develop it. What exactly changed on April 30, 2018? What changes have the Business Constitution introduced?

Relations between business and administration based on new rules

Unclear regulations, complex procedures and legal uncertainty are not conducive to running a business. The Business Constitution consists of five acts that redefine the foundations of economic law. They were expressed in the Entrepreneurs' Law - the act that replaced the act on freedom of economic activity. These are:

  • general principles of Entrepreneurs' rights,
  • legal certainty clause,
  • principles of creating economic law.

The new legal regulations have been developed with entrepreneurs in mind and are intended to improve their business operations. The most important rules that have come into force include the principle of resolving doubts in favor of the entrepreneur, the principle of proportionality (the administration authority cannot demand documents from the entrepreneur that are not necessary to settle his case) and the principle of friendly interpretation of regulations - entrepreneurs do not have to worry that unclear provisions will be used against them.

The new solutions are, on the one hand, to facilitate running a business by people who already own a business, and on the other, to encourage a larger group of people to try their hand at business. We present new products that are already in force and those that will come into force soon as part of the Business Constitution.

Facilitations for new entrepreneurs

The Business Constitution introduced new solutions dedicated to people who are just starting their business. Unregistered activity (unregistered), as it is mentioned, allows you to try your hand at business without having to deal with many formalities. A person interested in conducting unregistered activities may not:

  • perform business activity in the last 60 months,
  • earn more than 50% of operating income the amount of the minimum wage.

From January 1, 2020, the minimum remuneration for work will amount to PLN 2,600 gross, i.e. an entrepreneur as part of non-registered activity cannot have income higher than PLN 1,300. Despite the formalities, all revenues are taxed according to general rules. This means that the entrepreneur will have to pay a tax of 17%. of income, he will also be able to take advantage of the tax-free amount of PLN 556.02.

When conducting unregistered business activity, the entrepreneur is not obliged to register for social insurance and health insurance.

Relief for the start and "Little ZUS" - a recipe for high ZUS contributions

There is a tendency in Poland - many entrepreneurs close their business after the first two years, i.e. after losing the right to pay ZUS premiums in a preferential amount. For many entrepreneurs, the necessity to pay contributions in full amount is a very heavy burden, especially since until recently the amount of contributions was detached from the income / income obtained by the entrepreneur.

As part of the Business Constitution, the legislator has prepared solutions supporting both new entrepreneurs and those who have been operating on the market for some time. New entrepreneurs can take advantage of the start-up tax relief. As part of it, for the first 6 months they do not have to pay social security contributions - only the health insurance premium is obligatory. After the end of this period, the entrepreneur may pay ZUS contributions in the already mentioned preferential amount (for a maximum of 24 months).

From January 1, 2019, entrepreneurs operating on a small scale can take advantage of the "small ZUS". Initially, ZUS contributions were linked to the income earned by the entrepreneur. From 2020, the legislator went a step further, making the amount of contributions dependent on income. In order to pay lower ZUS contributions, the entrepreneur must meet the following conditions:

  • in the previous calendar year, obtain an income of up to PLN 120,000,
  • make an appropriate notification (by January 8, 2020),
  • not to perform business activities for his former employer.

"Small ZUS" is a response to the needs of entrepreneurs and at the same time a solution that is to help the smallest companies increase their competitiveness on the market.

Numerous facilitations for companies from various industries

The Business Constitution introduced over 100 changes that are already in force and improve the activities of entrepreneurs. Examples include:

  • the possibility of a one-off depreciation of new fixed assets up to PLN 100,000 per year,
  • companies have to set up an on-site Social Benefit Fund only when they employ 50 employees (previously it was 20),
  • entrepreneurs received access to the results of research and development conducted by the Central Office of Measures,
  • the limit on the value of fixed assets and intangible assets was increased - from 3.5 to 10 thousand. zloty,
  • entrepreneurs can take advantage of a higher tax relief for their research and development activities.
  • Many of the implemented simplifications have been developed with the rapidly developing construction industry in mind. The legislator abolished the obligation to obtain a building permit or to notify works in the case of certain construction works, and minor deviations from the design (up to 2%) are accepted without the need to meet additional requirements. Entrepreneurs who act as subcontractors received additional protection - they can independently notify the investor of participation in the construction works. If the investor does not object within 30 days, he will be responsible for the payment of the subcontractor's remuneration.

Spokesman for Small and Medium Enterprises

The Act on the Ombudsman for Small and Medium-sized Entrepreneurs established a one-person body whose main purpose is to protect the interests of micro, small and medium-sized enterprises. Its tasks are listed in the aforementioned act and include:

  • issuing opinions on draft normative acts concerning the interests of entrepreneurs,
  • applying to authorities for issuing legal explanations,
  • informing control bodies about irregularities in the functioning of public administration bodies,
  • cooperation with non-governmental, social and professional organizations, whose statutory goals include the protection of entrepreneurs' rights,
  • conducting educational and information activities related to running a business in Poland.

The Ombudsman may also take action or transfer the case according to his jurisdiction, when he receives a request addressed to him. Both entrepreneurs and business organizations can apply to the Defender.

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A package of solutions for companies from the SME sector

Special amenities have been developed for companies from the SME sector, which are the most numerous on the Polish market. Most of the simplifications have been in force since January 1, 2019. The most important ones include:

  • including the remuneration of the spouse and the minor's child in the catalog of tax costs - this means that the entrepreneur employing the spouse may include his remuneration in tax deductible costs,
  • changes in health and safety training - after the changes, 5 million employees will not undergo periodic health and safety training, which means financial savings for companies; additionally, the obligation to employ a health and safety specialist applies to companies employing over 50 employees (so far such an obligation was imposed on companies employing 20 employees),
  • raising the sales threshold qualifying for the taxpayer to qualify for the so-called "Small taxpayer" from EUR 1.2 million to EUR 2 million - he has the right, inter alia, for quarterly settlement of tax advances and a one-time recognition of the value of a fixed asset to tax deductible costs.

In total, as part of the Business Constitution for companies from the SME sector, 50 simplifications were prepared, mainly covering tax and economic law.

Electronization and shortening of the retention period for files

Today, entrepreneurs can communicate with offices using ICT systems. This makes it much easier - you can get a reply faster this way, and the elimination of paper documents means lower costs. The Business Constitution develops digitization. From January 1, 2019, employers can submit information about the insured to ZUS in electronic form. This, in turn, is to shorten the period of storing employee files - specialists from ZUS will have the necessary data on the basis of which they will determine the right to benefits paid by this body.

Thanks to further digitalisation, entrepreneurs can save. It is estimated that employers spend about PLN 130 million every year on the obligations related to the keeping and storage of employee records. After introducing the changes, this amount will decrease from year to year - employers can also keep personal and payroll documentation in electronic form.

A simple joint-stock company and solutions limiting payment gridlocks and the business constitution

Although the most important changes introduced under the Business Constitution have been in force since April 30, 2018, the legislator continues to create regulations to facilitate entrepreneurs running a business in Poland. From January 1, 2020, the provisions of the Act amending certain acts to reduce payment gridlocks, which are designed to help entrepreneurs maintain financial liquidity, enter into force. The act sets the maximum payment terms between contractors, e.g .:

  • 60 days with the possibility of extending the deadline in the case of cooperation of two equivalent companies from the SME sector,
  • 60 days if the debtor is a large entrepreneur and the creditor is an SME,
  • 30 days, if the debtor is a public entity (the exception are medical entities, for which the 60-day deadline has been left) and the creditor is an SME.

In March 2020, a simple joint stock company (PSA) will be available that combines the advantages of a limited liability company and a joint stock company. To set up this company, the share capital in the form of PLN 1 is enough. Although the changes were dictated by the desire to create an environment conducive to the development of startups, anyone can set up a simple joint-stock company. For startups, however, it is supposed to be a way to quickly obtain the funds necessary to conduct research and work on innovative products or services.

The above-mentioned simplifications and facilitations are not all regulations that entrepreneurs will be able to take advantage of. The ministries are announcing work on subsequent acts, and this means further changes for all business owners in the near future.