Social security and health insurance contributions are one of the biggest burdens facing entrepreneurs. However, those registering a business for the first time or resuming it after a period of 5 years can count on the so-called Startup Relief. What is this solution based on?
Social security and health insurance contributions are one of the biggest burdens facing entrepreneurs. However, those registering a business for the first time or resuming it after a period of 5 years can count on the so-called Startup Relief. What is this solution based on?
The startup tax credit is nothing more than an exemption from the obligation to pay social security contributions. It is granted for the first 6 months of business, counting from the date of registration of the company. During this period, the entrepreneur does not have to pay fees for pension, disability and accident insurance, as well as for the Labor Fund and the Solidarity Fund.
Startup relief - who can benefit?
The startup relief was created for people who are starting a business for the first time, as well as resuming it (suspending or re-registering it) after 5 years from the end of the previous one.
The exemption applies to individuals who are sole proprietors or partners in civil partnerships. The beneficiary of the relief may not carry out activities for the benefit of a former employer with whom in the current or previous year he was connected by a full-time employment relationship and for whom he carried out activities coinciding with the scope of the current activity.
However, do you have to pay?
Very importantly, the Startup Relief does not apply to health insurance. Thus, an entrepreneur using it must regularly pay contributions to the Social Security, the amount of which depends on the form of taxation adopted in the company:
- 9% of the contribution assessment base in the case of settlement on a general basis (according to the tax scale).
- 4.9% of the contribution base in the case of accounting in the form of flat tax.
- 9% of the flat-rate base if settling on a lump sum from registered income (in 2022: PLN 380-950 depending on income).
Startup relief and what's next?
After the expiration of the 6-month Startup Relief period, an entrepreneur can still pay reduced social security contributions. This is made possible by the so-called Small Social Security, which companies are entitled to for another 24 months of business.
Businesses with revenues not exceeding PLN 120,000 in the previous year can also count on a relief called Small ZUS Plus. In accordance with the current legislation, it allows you to reduce social insurance premiums for a maximum of 36 months during the subsequent 60 months of business activity. It is necessary to remember, however, that to the said period of 36 months must also be added the time the entrepreneur uses the Small ZUS. The condition for taking advantage of the described relief is also running a business for not less than 60 days in the previous calendar year.
What conditions must be met to be covered by preferential contributions? Learn more about this in the article Preferential Social Security Contributions 2022.
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