Small ZUS as another convenience for entrepreneurs

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Entrepreneurs with low income can benefit from the new ZUS contribution relief, i.e. small ZUS. In the last year, there have been a few changes in accessing this relief and in determining the basis.In this article, we describe the most important information about the "small ZUS" tax relief!

What is small ZUS?

Small ZUS is a relief offered to entrepreneurs achieving relatively low income from their business activities. People who use it have the right to pay ZUS contributions calculated on an individually determined basis. This basis, however, depends on the amount of income that the entrepreneur achieved in the previous year.

As for the period of using small ZUS, it is limited to 36 months during 60 months of running a business. This means that, for example, after 3 years of continuous use of the tax relief, the entrepreneur cannot use it for the next 2 years and should pay contributions from a large ZUS.

Conditions for using the small ZUS

The small ZUS may be used by a person running a business if they meet all of the following conditions:

  • operated for at least 60 days in the previous year;
  • last year's revenue did not exceed 120 thousand. zloty;
  • does not meet the conditions for using the preferences in the payment of contributions (contributions are calculated from 30% of the minimum wage);
  • in the previous year, it did not combine VAT exemption with payment of tax in the form of a tax card;
  • does not perform activities under the employment contract for the former or current employer in the current or previous calendar year;
  • in the previous year, she was not subject to insurance for other non-agricultural activities (i.e. as an creator and artist, partner of a general partnership, limited partnership, partnership, sole proprietorship, shareholder of a simple joint-stock company, conducting activities in the field of a freelance profession or running schools or other educational institutions ).

Example 1.

Mr. Jan set up a business on March 15, 2020 and made a notification to ZUS with the code 05 40. This means that:

  • uses the start discount until the end of September 2020;
  • from October 2020 to the end of September 2022, he pays preferential ZUS contributions (application to ZUS with the code 05 70).

Mr. Jan, in connection with his right to use the “start-up relief” first, and then the “preferential ZUS contribution” relief, cannot apply to the small ZUS until the end of the preferences.

Importantly, in the case of running a business for part of the year, the income limit is reduced proportionally to the number of days of active business.

Example 2.

Mr. Waldemar operated for 252 days in 2020. For this period, he achieved income in the amount of PLN 90 thousand. Will he be able to take advantage of a small ZUS?

The income limit for 189 days of active business is:

PLN 120,000 / 365 days x 252 days = PLN 82,849.32.

The achieved income is higher than the limit set in proportion to the number of days of business activity, therefore the entrepreneur is not entitled to a small ZUS.

Small ZUS - how to apply for a relief?

Small ZUS plus tax relief application is not obvious. It all depends on what contributions the entrepreneur was reported to in December 2020.

Application to the small ZUS, when in December 2020 the small ZUS was used

If the entrepreneur was registered with the small ZUS in December 2020 and wants to continue this relief in 2021, he does not have to re-register. The code of the insurance title on small ZUS relief is 05 90 or from 05 92.

Reporting to the small ZUS when the use of this relief begins in January 2021

An entrepreneur who paid contributions from the basis of large ZUS in December 2020 or ended the preferential period on December 31, 2020, in order to take advantage of the income contribution relief, should report to ZUS with the appropriate insurance title code. In order to do this, you must first deregister with ZUS using the ZUS ZWUA declaration with the current insurance title code, and enter 600 as the reason for de-registration. Then, the entrepreneur must re-register using the ZUS ZUA / ZZA forms. The application should contain the insurance title code 05 90 or 05 92. The deadline for deregistering and reporting to this relief should be the same in order to maintain insurance continuity. If the application takes place from January 1, 2021, then January 1, 2021 is entered as the date of termination / arising of the insurance obligation. The deadline for registration with the small ZUS is specified in Art. 36 sec. 4b and section 14a of the Act on the Social Insurance System (hereinafter referred to as the Act on Social Insurance).

Art. 36 of the Act on the Social Insurance System
"4b. The insured person referred to in Art. 18c paragraph. 1, who started or resumed non-agricultural economic activity in January of a given calendar year, shall submit the application to social security by the end of that month. If this period is shorter than 7 days, the insured person must register for social insurance within 7 days from the date on which the insurance obligation arises.
[...]
14a. The change in relation to the data shown in the notification referred to in para. 10, related to the insurance title related to the method of calculating the basis of the contribution rates referred to in Art. 18c paragraph. 1, the insured shall notify the Institution by submitting a deregistration and re-application to social insurance with correct data within:
1) by the end of January of a given calendar year, if the change in relation to the data indicated in the application takes place in January of that year, and if this period is shorter than 7 days, the insured person applies to social insurance within 7 days of the change;
2) 7 days from the change - in other cases ”.

If the entrepreneur started or resumed his activity in January of a given year and he also acquired the right to a small ZUS in this place, then the application may be sent by the end of January. If the notification deadline is shorter than 7 days, the notification is then made within 7 days. When the entrepreneur meets the conditions for joining this relief during the year (e.g. after the end of the preferential period), he may re-register to the code 05 90/05 92 within 7 days from the change of the insurance obligation.

Example 3.

After resuming operations on January 27, 2021, Mr. Bartosz wants to take advantage of the small ZUS tax relief. The application documents should be sent no later than February 3, 2021.

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Calculation of the contribution base - small ZUS plus

When calculating the contribution base for a small ZUS, the amount of income earned in the previous calendar year is taken. Income should not be confused with the income the limit of which appears in the conditions entitling you to take advantage of the tax relief. Income is the difference between revenues and costs, and if the costs included social security contributions, then in accordance with Art. 18c paragraph. 4a of the Act on the Social Insurance System, their value should be added to the income. For persons settling the tax in the form of a registered lump sum or tax card, the concept of income and income has been established separately.

Art. 18c sec. 12 of the Act on the Social Insurance System
"In the case of persons to whom the provisions on flat-rate income tax applied in the previous calendar year in the form of:
1) a tax card, and which did not benefit from the exemption of sales from tax on goods and services pursuant to art. 113 paragraph. 1 and 9 of the Act of March 11, 2004 on tax on goods and services, by:
a) the annual income from non-agricultural economic activity obtained in the previous calendar year, referred to in paragraph 1, you should understand the value of the sale referred to in article 1. 2 point 22 of the Act of March 11, 2004 on tax on goods and services, subject to this tax, without the amount of this tax;
b) the annual non-agricultural business income obtained in the previous calendar year, referred to in paragraph 4, should be understood as the annual income from non-agricultural economic activities, within the meaning of point (a). a, multiplied by a factor of 0.5;
2) a lump sum on recorded income, by the annual income from non-agricultural economic activity obtained in the previous calendar year, referred to in paragraph 1. 4, you should understand the annual income from non-agricultural economic activities, referred to in paragraph 1. 1 multiplied by a factor of 0.5 ”.

Example 4.

Karolina's business income is taxed with a registered lump sum. In 2020, its revenue amounted to PLN 102,528. Therefore, the income to be used in calculating the base is PLN 51,264 (PLN 102,528 x 0.5).

The basis for contributions to the small ZUS relief must be determined on the basis of the formula included in the Act on the social insurance system (Article 18 (4)):

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.

As far as the Labor Fund is concerned, the contribution to it should be calculated only if the calculation basis is at least equal to the minimum remuneration for work.

Example 5.

In 2020, the entrepreneur achieved an income of PLN 67,500, he pays the tax on general terms. He ran the activity throughout the year. The basis of small ZUS will be calculated as follows:

PLN 67 500/365 days x 30 = PLN 5,547.95

PLN 5,547.95 x 0.5 = PLN 2,773.98.

The basis for calculating contributions for the entrepreneur will be PLN 2,773.98. Lump sum ZUS contributions in 2021 will be paid from the amount of PLN 3,155.40. In this situation, the entrepreneur paying small ZUS plus will save PLN 187.99 per month. It is presented in the table below.

 

Small ZUS

Large Social Insurance Institution

Basis for social composition and FP

PLN 2,773.98

PLN 3,155.40

Skł. social (with voluntary sick leave)

PLN 877.69

PLN 988.37

Skł. for the Labor Fund

PLN 0

PLN 77.31

Total contributions to be paid

PLN 877.69

1065,68

The basis for a small ZUS cannot be:

  • lower than 30% of the minimum wage in a given calendar year - PLN 840 in 2021;
  • higher than 60% of the average monthly salary forecast for a given calendar year - in 2021 PLN 3,155.40.

If it exceeds any of the above thresholds, then it is compared to the minimum or maximum amount.

Example 6.

Ms Amelia ran a business for 193 days in 2020. Meets the conditions for using the small ZUS from January 2021. The income for 2020 was PLN 9,542. The contribution basis will be determined as follows:

PLN 9,542 / 193 days x 30 = PLN 1,483.21

PLN 1,483.21 x 0.5 = PLN 741.61.

The amount of PLN 741.61 is lower than the minimum base, therefore it should be increased to PLN 840 and on this amount, Amelia will pay contributions in 2021.

Preparation of settlement declarations for the month of starting to use the small ZUS

It is very important to correctly prepare the settlement declaration for the first month of using the discount. It should contain DRA reports, part II or RCA part. II, which will show data on the previous year's income and income, as well as the basis for contributions calculated according to the formula described earlier. Thanks to them, ZUS can verify whether the calculation basis has been correctly established. If the declaration with the report is not submitted by the 10th day (if the entrepreneur pays contributions only for himself) or the 15th day (if the entrepreneur employs employees) of the following month, ZUS will duplicate the last submitted declaration and thus arrears may arise in later periods, because, as a rule, the new basis will be available only for those months in which the DRA part II or RCA part. II in due time.

Example 7.

Mr. Radosław joined the small ZUS in January 2021. However, he did not submit the DRA declaration with the DRA report part II until February 10. He did not do this until March 4. Since Mr. It was only for February that he could pay reduced contributions, as the declarations for January and February were submitted on March 4.

Small ZUS plus in the wFirma.pl system

An entrepreneur can complete all formalities related to joining a small ZUS using the wFirma.pl system. To this end, he should draw up ZUS ZWUA in START »ZUS» APPLICATION DECLARATIONS »ADD A DECLARATION» ZUS ZWUA.

Then prepare ZUS ZUA in START »ZUS» APPLICATION DECLARATIONS »ADD A DECLARATION» ZUS ZUA.

Both declarations can be sent directly from the system to ZUS. Just select them and select the SEND / EXPORT »SEND THE SET TO ZUS option from the top bar, and then, after naming the set, have it shipped by an employee of wFirma.pl.

The next step will be to establish the contribution base. To do this, just go to SETTINGS »TAXES» ZUS »GENERAL, where in the Scheme field you can select" contributions from income "from the drop-down list.

After selecting the above scheme, an additional tab BASE OF SMALL ZUS will appear. Just click ADD BASE. After opening the window, check the automatically read data that comes from the entries added in the system (provided that accounting was carried out in the previous calendar year):

  • number of days of operation (from the previous year) - it should be adjusted for possible days of suspension of activity,
  • revenue from 2020 and
  • income from 2020.

From the calculated basis, contributions will be calculated on the DRA settlement declaration. Importantly, for the first month of using a small ZUS, it is necessary to send DRA reports, part II or RCA part. II, which will display data on the revenue and income from the previous year. These reports are created automatically in the place marked as the month of obtaining the right to the discount.

Small ZUS gives entrepreneurs with low income a chance to reduce the costs associated with paying ZUS contributions. However, it should be remembered that in order to take advantage of this relief, it is necessary to meet a number of requirements - and if you are already entitled to it, then it will be very important to notify ZUS in a timely manner.