The summer vacation season has begun. Strictly speaking, school and university students have begun their vacation. However, most employees will likely take paid leave during this period. Business owners are not entitled to paid leave, so some cannot afford a longer break from work. However, to make this easier for them, a so-called contribution holiday has been introduced, allowing them to waive social security contributions for a selected month of the year.
This solution was one of the government's announcements for 2024. An amendment to the Act on the Social Insurance System introducing an exemption from contributions for entrepreneurs was signed by the President in June.
To benefit from the contribution holiday, you must submit an application to the Social Insurance Institution (ZUS) (available on the ZUS Electronic Services Portal) in the month preceding the month for which you wish to benefit. Importantly, contributions for retirement, disability, and accident insurance will be paid on your behalf by the State Treasury. During the contribution holiday, you can also receive sickness benefits, provided you meet the usual requirements. During the contribution holiday, you don't have to suspend your business. Therefore, you can continue working and issuing invoices as usual.
This preference, however, has certain limitations. It is available only to entrepreneurs whose annual revenues over the last two years have not exceeded €2 million, provided they employ no more than nine employees. However, it is not available to entrepreneurs who provide services to former employers or those who have exceeded the de minimis aid limit (the exemption from contributions will be considered de minimis aid).
Apart from the obvious benefit of not paying contributions, this solution has several drawbacks:
- It does not exempt from health insurance contributions – during the “holiday” period, the entrepreneur will have to pay health insurance contributions under normal rules,
- The exemption applies to entrepreneurs' contributions - they will still have to pay all contributions for their employees,
- The entrepreneur will not include the refunded contributions in costs nor deduct them from income,
- The state budget will pay the lowest required contributions for a given entrepreneur, which means lower benefits for people paying higher contributions,
- In 2024, the "contribution holiday" will fall in winter – applications for exemption from contributions can be submitted from November 2024, meaning that December will be the "holiday" month. Contributions for December are paid in January, so entrepreneurs will not be able to realize the real benefit until January 2025.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of June 28, 2024
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