A COMPANY WITHOUT ZUS REGISTRATION IN POLAND

A business without ZUS contributions in Poland can be legal. Those dreaming of running their own business can avoid paying the ZUS contributions that place a burden on entrepreneurs. What options are available to business owners in this regard? It turns out that entrepreneurs do have a choice, because a legal business without ZUS registration is not limited to unregistered businesses. What else is there? Read on to find out.

A business without ZUS contributions in Poland. Is it possible?

Running a business in Poland is often associated with the need to pay taxes and social security contributions to the Social Insurance Institution (ZUS), which are rising year on year. In 2023, ZUS contributions (excluding the health insurance contribution) for entrepreneurs operating under the general rules amount to 1,418.48 zł – if the sickness benefit contribution is paid – and 1,316.54 zł if it is not. Of course, the health insurance contribution must be added to this amount; this is usually 9 per cent of the income from business activities earned in the month preceding the month for which the contribution is calculated. However, the government has introduced a minimum health insurance threshold, meaning that the health insurance contribution in 2023 cannot be less than 314.10 PLN. Many people want to avoid paying contributions to ZUS and wonder whether a business without ZUS in Poland is legal and whether it is generally possible to avoid paying contributions. It is worth knowing that, under the law, it is possible to run a business without paying ZUS. There are several options.

Is it possible to run a business without paying ZUS contributions?

How do you set up a business without paying ZUS? Firstly, a legal business without ZUS can be run as an unregistered trade. This is the simplest way to run your own business without having to pay ZUS.

Unregistered business activity as a legal business without ZUS

In Poland, it is possible to run a business without paying social security contributions by operating as an unregistered business. The law allows you to run a business without having to register it, and therefore without having to pay social security contributions, provided certain conditions are met. It is possible to run a legal business without ZUS contributions as an unregistered business, provided that the entrepreneur’s monthly income does not exceed 75 per cent of the minimum wage, i.e. 2,700 PLN gross, and provided that they have not run their own business within the last 60 months. Exceeding the threshold mentioned above means you must set up a sole trader business.

No ZUS, but with liability. Running a business without ZUS in Poland

However, a legal business without ZUS is not free from obligations and liability. This means that when running a business without ZUS in Poland, you must be aware of the other obligations incumbent on entrepreneurs and the legal consequences of the decisions you make. For example, an entrepreneur running an unregistered business is obliged to keep accounting records, and if they also employ staff – amongst other things – to maintain staff records and ensure salaries are paid on time. Regardless of whether the business owner pays ZUS contributions or not, they may be held liable on an equal footing with other entrepreneurs listed in the CEIDG.

A legal business without ZUS contributions in Poland – other options

Apart from unregistered business activity, a limited liability company (spółka z o.o.) may be a viable solution for those wishing to avoid ZUS contributions. A slightly different option is to take up full-time employment with another company or to operate as a sole trader. However, certain costs must be taken into account here.

A business without ZUS contributions in Poland versus a limited liability company (spółka z o.o.)

Anyone considering how to set up a business without paying ZUS should look into a limited liability company (spółka z o.o.). This is an interesting way to run a legal business without ZUS contributions. Why? Because, as a general rule, the owners of a limited liability company do not have to pay social security contributions. There is, however, one exception to this rule. The sole shareholder of a limited liability company will be subject to social security contributions. What’s more! A shareholder who holds a decisive majority of shares, e.g. 98 per cent, may also be obliged to pay ZUS contributions. Such a company may be treated by the Social Insurance Institution (ZUS) as a circumvention of the law. Interestingly, there is no consensus on this issue in case law.

A full-time job and your own business without ZUS

Combining a business with a full-time job is not only legal but also beneficial for a sole trader. Under the law, if the entrepreneur’s remuneration from their employment relationship is not lower than the national minimum wage, the business owner is covered by social insurance through their employer. What does this mean in practice? If an entrepreneur earns at least the national minimum wage, they do not have to pay social security contributions on their business income. They are then only required to pay the health insurance contribution.

Who is a ‘ZUS-free’ business in Poland for?

An unregistered business is the ideal solution for budding entrepreneurs who are just starting out and do not know what level of income to expect. It is also a good option for business owners who wish to run a business on a smaller scale in a low-cost sector. In their case, high operating costs could jeopardise the business.