The start-up relief exempts individuals running a sole proprietorship from paying social security contributions in Poland for a period of six months. What are the conditions that an individual must meet in order to qualify for this relief and who is eligible?
Who is eligible?
When registering a business with CEIDG (Business Register and Inquiries) in Poland, you are obliged to register yourself for social and health insurance at the Polish Social Insurance Institution (ZUS) as long as you are not subject to social insurance on a different basis. Contributions may be paid in full or on a preferential basis (referred to as “small ZUS
”), but there is also the start-up relief for new businesses.
The start-up relief is generally available to individuals who open their business for the first time or re-start it 5 years after they suspended or closed their previous business.
In order to qualify for this relief you must:
- be a natural person (individual running a sole proprietorship) or a partner in a civil partnership,
- open a business for the first time or re-open it after no less than 60 months since you have last suspended it or closed,
- not perform activities for your former employer for which you worked in the current or previous calendar year and performed activities falling within the scope of the current business activity,
- not be subject to insurance with KRUS (Agriculture Social Insurance Fund).
ATTENTION! If an individual enjoys the start-up relief and provides services or work under the contract of mandate, the client is not obliged to pay social security contributions for him, unless the subject of the contract with the client (agency, mandate or service contract) is the same as the subject of his business activity or the generated revenues are taxed as revenues from business activity.
What contributions are you relieved from?
The start-up relief exempts a person who sets up a business subject to registration with CEIDG and not insured with ZUS on any other account, from the obligation to pay the following contributions:
- social security contributions: old-age, disability pension and accident insurance
- labour fund contribution,
- solidarity fund contribution.
The start-up relief does not, however, exempt from health insurance contribution. Therefore, during the period of relief, since ZUS health contributions are not paid, you do not acquire the right to benefits in the event of sickness or accident. The period of relief is also not included in the contribution period towards the old-age and disability pension insurance.
IMPORTANT! An employer who enjoys the start-up relief is obliged to pay contributions for its employees and contractors subject to social security from the commencement of business activity.
How to count the period of exemption?
The start-up relief entitles you to be exempted from ZUS contributions for a period of six months from the start of business. If the business start date falls during a month, that month is not included in the 6-month period, and if the start of business takes place on the first day of the month, this month is included in the period of relief.
The period of relief runs continuously, so the suspension of activities does not affect the time in which you can benefit from ZUS contributions exemption.
In addition, anyone who enjoys the start-up relief has the right to resign from the exemption from paying contributions at any time and register with the ZUS as payer of social security contributions.
How exemption from contributions affects benefits
During the period of relief you do not pay an old-age pension insurance contributions, therefore, this period is not counted when determining your right to old-age pension. In addition, during the period of relief you are not entitled to sickness and rehabilitation benefits for incapacity for work in the event of accident at work or occupational disease.