Immunization program in progress. On the horizon, the end of the pandemic and a chance for a market rebound and an injection of capital for entrepreneurs and employees of many industries. The government supports business with another aid program. Entrepreneurs may submit applications, among others for cancellation of ZUS contributions as part of the 9th edition of the anti-crisis shield. That sounds really good, but you have to remember that a game rule change was just announced during the course of the game. They are to be implemented after the new year. As we already wrote, it will be more expensive.
Although it is said that an adjustment to the assumptions of the Polish Order is planned, it is known that the costs of running a business and ZUS contributions will increase year on year. Regardless of how the health premium is calculated in 2022, it will be the highest increase in more than a decade. The reason is the increase in the value of the estimated minimum and average wages. As you know, these values are the basis for calculating social insurance contributions. In addition to the increase in the value of the base, the rules for calculating contributions are to change. Experts estimate that in the optimistic scenario, the flat-rate health insurance premium for sole proprietorships will increase from the current level of 381 to nearly PLN 510. Thus, people running a business will pay contributions as much as 11% higher than in 2021. The monthly contribution to ZUS will be over PLN 1,700.
| Social security contributions for 2022 | Increase over 2021 | Increase over 2021 |
| Pension contribution | PLN 683.87 | increase by PLN 67.94 |
| Disability pension contribution | PLN 280.28 | an increase of PLN 27.85 |
| Sickness insurance | 85 PLN 83 | an increase of PLN 8.52 |
| Accident premium | PLN 58.51 | increase by PLN 5.81 |
| Contribution to the Labor Fund | PLN 85.83 | increase by PLN 8.52 |
| Total Social Insurance Institution contributions excluding health insurance | PLN 1,194.32 | an increase by PLN 118.64 (11%) |
The above figures do not include the health contribution. The amount of health insurance premium is calculated separately, and its value depends on a different indicator. This indicator will not be released until January.
This is still good news in view of the announced full 9%, but you must be aware that we are only talking about the announcement of the correction of one of the elements of the Polish Order, which already affects the business climate in Poland.
High costs in Poland and low in Great Britain
Running a business in Poland becomes more expensive and operating costs are difficult to estimate unequivocally. It is also worth mentioning the CIT tax introduced this year on profits generated in limited partnerships and the limitations in access to the so-called Estonian CIT for some, including one-person limited liability companies These and many other planned changes mean that Polish entrepreneurs are actively looking for an alternative to running a business in the form of Polish business or a domestic limited liability company outside our country. As it turns out, a good solution may be to register a LTD company in Great Britain.
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For a Polish entrepreneur, LTD is a chance for lower taxes and greater social security benefits. Under certain conditions, additional benefits under British insurance can be obtained with relatively little effort. For today’s retirees living in Poland, who decided to take a similar step over a decade ago, the injection of additional funds from the British pension turns out to be extremely important and fully justifies the decision to join the British social insurance. Information on the value of the benefits you can get is available in the articles posted on our blog.
Difficult tax planning for entrepreneurs in Poland and simple solutions in England
Business is the art of making rational decisions. Polish entrepreneurs eagerly awaited information on the assumptions of the New Deal. Everyone assumed that the new regulations would turn out to be the wind in their sails, much needed after a period, hopefully, of a pandemic. The first calculations that appeared on the Web and on our blog after the announcement of the principles of the Polish Order clearly indicate that a large part of entrepreneurs and employees will be lost. In the case of the self-employed, earnings may decrease by more than one to several monthly earnings per year.
With such a scale of operations, it means a huge increase in costs and much less resources for consumption, servicing mortgage obligations and investments. No wonder that self-employed people are turning to mechanisms that have been functioning effectively for years and bring tangible benefits to people who decided to use them. Such a solution turns out to be the registration of LTD in Great Britain and taking the position of a director in it.
It is an excellent solution for running a sole proprietorship, but it also works well in models with an extensive employment structure. It all depends on the planning and needs resulting from the operational activity of a given enterprise. In any case, you can develop a suitable business model that allows you to legally save on taxes and even get an additional pension. Our company has been advising in this area for over 30 years and serves many entrepreneurs who have benefited when deciding to relocate their business. It is worth adding that some of them are already retired today and receive additional benefits from Great Britain.
Taxes without secrets and a company in the form of a LTD
Running a business in the form of a LTD company gives a number of additional opportunities, but the greatest advantages are the stable environment and no risk of unexpected changes that could worsen the situation of the entrepreneur. The British jurisdiction offers lower taxes for the director of the LTD company and the possibility of obtaining additional social benefits. A Polish entrepreneur establishing a LTD company in England can therefore use almost twice the tax-free amount than the one announced in Poland. Moreover, the value of the tax-free amount in Great Britain is regularly indexed and adjusted in line with the rate of change in the value of money. This is an excellent solution, as confirmed by numerous examples of companies transferred by our clients to the UK.
English business of a Polish tax resident
When speaking about relocating activities to the British market, it is worth paying attention to the fact that the registration of a LTD company in Great Britain does not oblige the entrepreneur to change the place of residence or tax residence. A Pole living in Poland who acts as a director in his British company LTD is obliged to settle accounts in the country. This means that it will also pay the tax in Poland, but thanks to the structure of the British tax system and the double taxation avoidance agreement between Poland and the UK, the total value of public levies will be clearly lower than that which would have to be paid by conducting activities generating the same income in Poland. That’s not all, the benefits are much more. According to the experience of our retired clients, in the long run, additional retirement benefits turn out to be one of the most important.
See also: Establishing a company in Great Britain – registration of a LTD company
To sum up, running a LTD company is a great alternative to self-employment in a Polish business or in a Polish limited liability company. Registering a company in England and assuming the position of a director in a LTD company allows you to reduce taxes paid by the entrepreneur and obtain additional benefits. Before making a decision, every entrepreneur can consult with experts who have specialized in relocation and servicing British LTD companies run by their Polish directors-owners.