Rescinding of the social security contributions cap | KPMG | PL

Global Mobility Services Alert: Rescinding of the social security (ZUS) contributions cap from 2018

Rescinding of the social security contributions cap

On 24 November 2017, the lower house of the Polish Parliament, at the third reading, adopted a draft amendment to the Social security system Act (the Act), which provides for the abolition of the upper limit for contributions to the pension fund and the disability fund, over which contributions are currently not paid.

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Global Mobility Services Alert: Rescinding of the social security (ZUS) contributions cap from 2018

According to the draft regulations presented by the Ministry of Family, Labour and Social Policy, it is assumed that the so called thirty-fold limit on the payment of pension fund and disability fund contributions will be abolished (in 2017 the limit is set at PLN 127 890 – once the year-to-date gross income, which is subject to social security, exceeds this amount, pension fund contributions and disability fund contributions cease being paid).

Adoption of provisions in the proposed shape will include among others, an increase in labour (remuneration) costs incurred by employers, as pension fund and disability fund contributions will be paid throughout the year, regardless of the amount of remuneration of employees (as is the case currently for illness fund contributions and accident fund contributions, paid respectively by the employee and employer).

This rule will also be introduced with contributions paid by the remitter for employees employed under special conditions for the Bridging Pension Fund.

It should also be noted that in the case of employees earning more than approximately PLN 10 000 (gross) per month, the new regulations will impact their net remuneration, since pension fund and disability fund contributions will continue to be deducted from their salaries throughout the year.

The regulations will now be debated by the Senate, but are expected to enter into force on 1 January 2018. If the regulations in question affect your business, please feel free to contact us – we remain at your disposal to provide support in getting prepared for the upcoming changes.


 

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