Monthly Archive: March 2019

Greater Tax Benefits for Self-Employed Workers Financial Advice

Future pensions. The reform can be obtained by sole proprietors.

Future pensions. The reform can be obtained by sole proprietors.

Employees are to collect money for their future pensions on special accounts – employee capital plans (PPK). They will save 2% there. net salary, and the employer is to pay extra 1.5% It will be possible to raise premiums – by the employee by a further 2 percent, and employers – by 2.5 percent.

The total minimum premium may thus amount to 3.5 percent and the maximum 8 percent. This is the result of the draft Act on PPK, which the government submitted in mid-February for social consultations.

There are also incentives provided by the state: a one-off welcome contribution of PLN 250 and an annual surcharge of PLN 240.

However, the PPK will not be available to a million self-employed people. In return, these people will receive a higher payment limit for individual retirement pension accounts (IKZE). The limit will be 1.8 times the average projected gross remuneration set in the draft Budget Act (normally it is 1.2 times this remuneration).

Currently, self-employed pay a pension premium to ZUS from 60 percent. average salary. If, therefore, they earn more than three fifths of the national average, their pension will be lower than the correspondingly earning employee. Therefore, in order to have adequate income at the end of working life, these people must necessarily save for retirement.

We have checked how the persons employed under a contract of employment, contracts for specific tasks and self-employed will benefit from the planned changes. The calculations were made by Łukasz Kozłowski, chief economist of Employers of the Republic of Poland. He assumed that the salary is 4500 PLN gross (for 40 years), and the real rate of return 3%.

Employee and his PPK

 Employee and his PPK

An employee employed on the basis of a contract of employment, paying the minimum contribution to the PPK (2% from the employee plus 1.5% from the employer), will raise capital in the amount of PLN 161.4 thousand. zł. In order not to lose tax benefits, he will be able to retire 40.3 thousand. PLN one-time plus one thousand PLN monthly for 10 years (re-evaluated in the future at the rate of return on other capital).

With this form of payment, the employee will reach a total of 26.2 thousand. PLN tax benefits. This includes: payments from the state (PLN 9.9 thousand), exemption of payments from Belka tax (PLN 14.4 thousand), dismissal of the employee contribution from PIT (PLN 7.8 thousand), payment of an additional PIT from the premium employers (minus PLN 5.8 thousand). The benefits in relation to the sum of contributions contributed will amount to 35.6 percent.

Contract work

 Contract work

A person who performs work on the basis of a specific work contract (will not be covered by the PPK) may, however, accumulate money on IKZE, but for it the payment limit will remain unchanged. If it will save the maximum possible amount, it will collect 465.6 thousand. zł. The money can be taken anyway after the age of 65 – once or in installments. The fiscal benefits will amount to 59.5 thousand. zł. They consist of: writing down contributions from the tax base of PIT (PLN 41 thousand) and 10%. a flat-rate tax on the payment of money instead of 19%. income tax (PLN 18.6 thousand). The benefits in relation to the sum of contributed premiums is 27.6 percent.



Self-employed, thanks to the fact that he will be able to take advantage of the increased maximum limit of payments on IKZE, he will be able to collect as much as 684.9 thousand. PLN of capital. This sum can be taken after reaching retirement age: either once or in installments.

The self-employed can count up to 89.3 thousand. of fiscal benefits, which will include: writing down contributions from the PIT tax base (PLN 61.5 thousand) and payment of 10%. a flat-rate tax instead of a 19-percent tax (PLN 27.8 thousand). The benefits in relation to the sum of contributions paid will amount to 27.6 percent.


 PPK plus IKZE

Calculations show that the self-employed will benefit the most. As Łukasz Kozłowski explains, total sums of capital accumulated on IKZE are much larger than in the PPK, because in the PPK the standard premium is 3.5%, and on the IKZE standard, a maximum of 10% can be paid. (in the case of an average salary) or 15% (self-employed). However, the tax benefits resulting from participation in the TNP are relatively higher – provided that we pay out the funds in the appropriate formula.

However, you need to consider two things. First of all, both the employees and the employer will be able to pay a higher premium to the PPK, which will significantly increase savings. Secondly, participation in the PPK will not exclude collecting money on IKZE (the limit is 1,2 times the average forecasted remuneration). In this way, employees will be able to additionally collect PLN 465.6 thousand on IKZE. zł.

The possibility is not enough

 The possibility is not enough

Each of these saving methods has advantages. In the case of IKZE, tax deductions are immediately perceptible when calculating PIT (for the year in which payments were made to the account). As Łukasz Kozłowski explains, the higher the rate of return, the greater the advantage of PPK compared to IKZE. It results from the fact that the payment from IKZE is taxed at 10%. flat rate.

In the case of PPK, it is planned that employees will be automatically saved with the option of resignation. It is different from IKZE. There is total voluntary here. Last year, the average payment to the account was 3.1 thousand. PLN, and the limit was 5.1 thousand. zł.

– In 2017, only 25 percent. having IKZE in Generali made payments in the amount of the maximum allowed limit. Among them only a part runs a business – says Arkadiusz Wiśniewski, a member of the board of Generali Życie. If this does not change, the self-employed will not be able to count on the decent pensions from the third pillar.

– Unfortunately, the problem is that a large part of the self-employed will probably not take advantage of this increased limit – says Marcin Wojewódka, legal adviser, partner at the office of Wojewódka and Partners. – As today, do not use the limit of payments to IKE or IKZE.

The government plans to introduce a PPK


– Employee capital plans (PPK) will be an element of the third pension pillar, along with other forms of additional savings, such as IKE, IKZE or PPE.

– Money from three sources will be transferred to PPK: from the employee, from the employer and a small part from the state budget.

– The capital will be disbursed after reaching the retirement age, but exceptions are provided for this rule.

– A future pensioner will be able to withdraw money before retirement without delay, provided that he returns all benefits (eg subsidies from the state budget).

– The draft Act on PPK assumes that new solutions will be introduced in stages. The earliest, since the beginning of 2019, PPKs are to be created by the largest employers employing over 250 employees. By mid-2020, at the latest, small companies and public finance sector units will start doing so.

– The Ministry of Finance estimates that, ultimately, 8.5 million people will join the program.

– The limit of payments for IKZE for persons conducting business activity is to be raised from the beginning of January 2021.

Offers for Business and Self-Employed Are Very Different


Liability Insurance Comparison: Offers for businesses and self-employed people are very different

Liability Insurance Comparison: Offers for businesses and self-employed people are very different In Germany, the legislature stipulates: The polluter can be held liable for all damages. This applies to individuals as well as to companies and the self-employed. The financial claims that result from the settlement of claims can not only amount to several thousand euros, but rise straight in the case of personal injury in the millions. For the cause of the damage that would in many cases mean financial ruin . For this reason, the insurance industry has launched the liability insurance. The liability insurance covers financial claims as a result of the settlement of claims. In the insurance market, it can be found as a private liability insurance, but also as a public liability. The latter is the liability insurance for companies and the self-employed . This guide summarizes the differences between liability insurance. In addition, you will learn what you need to look out for when it comes to good civil liability and which industry-specific benefits are included in the company liability insurance.


Significance and benefits of liability insurance

 Although the third party liability insurance covers other areas than private insurance, both have one thing in common: liability insurance starts with claims for damages made to the policyholder. Claims settlement can take place in three areas:

  • personal injury
  • financial losses
  • damage to property

In all three areas, insurers work with different coverage amounts. In some cases, these are prescribed by law as the minimum cover amounts for individual types of liability insurance; in other cases, these are individually set points for insurers. However, the experience of recent years shows that both the minimum coverage required by law and the definitions of insurers are sufficient for most damages.

Anyone who does business is always exposed to the risk that mistakes will occur while working as a freelancer, lawyer or, for example, a restaurateur. For these mistakes and damages, which result from it, it can be made liable by customers, but also by business partners. For instance, if guests in the restaurant are injured because the restaurant has not cleared the entrance area during the winter, they can demand compensation. Depending on the injury, this can quickly amount to several thousand euros.

Although a company can not avoid 100 percent damage, defects and accidents , it can protect itself against the resulting financial demands. This is possible with the liability insurance trade. Better known as public liability insurance, it was explicitly created for policyholders who are working in the commercial sector.

As with private liability insurance, large differences in benefits and prices also apply to the commercial variant in liability insurance.

The public liability covers damages that arise both in the commercial and in the professional field. The liability insurance for freelancers differs especially in the scope of services of that for companies. For a craftsman, for example, completely different services are more interesting than for a service provider.

Liability insurance for companies is available for all legal forms in the market:

  • GmbH
  • GbR
  • UG
  • AG
  • one-man business

Irrespective of the type of company and the size of the company, the following principle applies in the Federal Republic of Germany:

You can be held liable for all damages that arise in the context of the entrepreneurial activity on the basis of the enterprise as well as the self-employment aspect.

Significance and benefits of liability insurance If the liability insurance industry exists, the insurer not only takes over the claim for damages, but also handles the complete claims settlement. However, such insurance also always provides for certain legal protection, as the insurer automatically checks whether the claims of the third party are justified at all . Accordingly, the liability insurance for companies and their law fights. The policyholder’s duty is to submit a claim to the insurer for claim settlement. Furthermore, he must fully support the clarification of the claim. If new findings emerge in the course of the investigations, the claims are rejected by the insurance company. You are unfounded in this case.

In case of personal injury, liability insurance for the self-employed also jumps in for years of demands. If persons have been damaged by you or your company, product or inventory, you often have to expect not only to bear the costs of treatment , but also to pay damages. Years of payments are another burden for permanent damage. For all this comes the liability insurance.


Overview of the most important liability risks

Especially business start-ups, who have to deal very carefully and far-sighted with the financial means, would like to renounce especially in the first years on the liability insurance business. Depending on the industry, the associated risk factors and the size of the company, different monthly or annual contributions are charged. These can be very high, especially in individual business areas. Nevertheless, start-ups should not forego a certain level of basic protection , because there are liability risks everywhere. Even as a tutor, who pursues his activity only part-time, liability risks are given. The same applies to your own e-store or the various handicrafts.

The liability insurance trade not only takes into account damage as a result of a product or work that has been carried out, but also as a result of improper consultations . These are especially important for service providers or business consultants. Fundamentally, also members of the liberal professions should fall back on the liability insurance for freelancers. Here it assumes an important existence protection.

For freelancers as well as for entrepreneurs applies: The private liability insurance does not cover any damage that has arisen in the context of entrepreneurial activity. Thus, the conclusion of a separate insurance is essential for a livelihood.

The liability insurance industry minimizes the risks for companies:

  • Protection against accidents
  • Financial relief in case of damage
  • Defense against unauthorized claims
  • Regulation of covered and justified damage

Given the high level of claims that an enterprise may incur as a result of an accident alone, the contributions that providers demand are small.

Extent of liability insurance for companies

While the insurance coverage for freelancers is clear that this damages the self-employed, this is not so clear for companies. For companies employing staff, the situation is different. This raises the question of whether only the managing director is included in the insurance coverage. The commercial liability insurance basically includes the employees of a company. Under German law, employers are fundamentally responsible for the damages that happen to employees. For a company with 20 employees, the risk is quite different than for a freelancer. This is taken into account by the insurer.

The legal situation is different for subcontractors. Subcontractors are mostly freelancers. They are not included in the insurance coverage of the liability insurance for companies. If they cause damage, the victims usually turn to the subcontractors themselves and assert their claims there.

The liability insurance business does not cover any damage that employees make to their employer. Here is an example:

If a restaurant employee damages a table, he has to pay for the damage himself if the employer so requests. This is not a case of damage that can be settled through the insurance. Even accidents suffered by the employees are no damage to the public liability insurance.

There is no compulsory insurance for liability insurance . Each company can decide for itself whether it secures itself accordingly, in order to protect itself against possible financial demands.


Damage excluded by the insurance

Damage excluded by the insurance In the liability insurance comparison , in principle it should also be checked which damages are not covered by the public liability . These include

  1. Mutual damage: This is damage caused by employees to the employer.
  2. Damage caused intentionally
  3. Damage due to gross negligence or accidents

Many companies have their premises in rented properties. Here is a settlement on the liability insurance trade possible. But it is also important that the damage is reported as soon as possible. Thus, it can be clarified quickly whether a settlement by the insurer is possible. Incidentally, this also applies to other rented items such as

  • boat
  • automobile
  • motorcycle
  • scooter
  • machinery

Not every insurance covers this damage. Here you must pay attention in the liability insurance comparison that the assumption of rent damages is included. This can partly be included in the contracts. However, if your company owns predominantly property and rarely resorts to rentals and rental items , you may waive this additional benefit.

Claims settlement by the liability insurance

If damage occurs through you, the liability insurance for companies assumes the complete claims settlement. For you as an insured, this is very pleasant, because you are only insured to assist in the investigation or investigation. Incidentally, this service also offers a favorable liability insurance. The settlement of claims and the tasks that you have to assume as an insurer are very clear. These are the most important steps:

  1. Report the damage to the insurance. This can initially be done informally. Report the damage caused by telephone, e-mail, fax or perhaps personally to the insurance company.
  2. You will receive a form from the provider. You have to fill in this as precisely as possible, because with the form you describe the damage.
  3. After submitting the completed form, the insurance may have further questions or request documentation. Respond to it as quickly as possible, so that nothing is in the way of a secure claim settlement.
  4. The insurer may ask more witnesses about the transaction.
  5. The insurer will review the transaction.
  6. If the test is successful, the damage will be paid.

In the liability insurance comparison, information about previous losses usually has to be provided. This is particularly relevant for companies that have already taken out a liability insurance business and are now looking for a new provider. The new insurers are fundamentally interested in already regulated losses because they always allow an assessment of the risk. Nevertheless:

Even in the case of a pre-claim, a company may not refuse the insurance cover. An insurance must nevertheless be possible.

Asked about the previous damage, this question can refer to a period of three to five years. Usually only the type of damage and the amount of damage have to be mentioned here. Furthermore, the providers require information about the previous insurer to be able to consult .


Liability insurance in comparison: Overview of the different types of insurance

The liability insurance is one of the most important safeguards that exist, because they always represent a certain livelihood. Because damage can occur in different areas and the cause of damage must not always be people, there are now many liability insurance or insurance combinations in the insurance market. Thus, for example, a household and personal liability insurance can be completed on a private basis. It covers two damage areas . Tests by the Stiftung Warentest show that comparison is worthwhile in all offers of liability insurance.

The table summarizes the most important liability insurance policies and their characteristics .

The liability insurance is offered by most insurance companies in Germany. The selection in the liability insurance comparison is correspondingly large. Some vendors have prevailed due to the performance of comparisons and tests . Well-known insurance companies are

  • AXA
  • Gotha insurance
  • HUK & HUK24
  • CosmosDirekt
  • DA Direct
  • Ergo
  • Generali
  • HDI

Extensions to the public liability insurance

Extensions to the public liability insurance If you take out a public liability insurance, you can extend it with various modules. For example, most insurers offer additional options in addition to standard services. Furthermore, the combination with other types of insurance is possible. For example, you can combine liability insurance with commercial liability.

This additional insurance is suitable for all consultants and service providers. The financial loss liability exclusively takes over the regulation of pecuniary losses that have arisen, for example, as a result of incorrect advice or a wrongly performed service. Especially important is this protection for

  • Architects
  • Lawyers
  • tax consultant

For many insurers, the combination of operating and private liability is also possible. You do not have to pay extra for most of the time. Personal liability covers all damage that occurs in the private sphere. In addition to the policyholder, it always includes the family, ie the spouse and the children.

Factors influencing the contributions

The contributions of the liability insurance trade are always calculated individually. Of course, the providers also advertise here with very reasonable prices. The minimum contributions concern only very few companies. The insurance premiums depend on the following factors:

  • Operating mode or activity
  • Number of employees and company size
  • annual sales
  • deductible

Extend the performance protection by options, these can increase the monthly contributions further. Influence on the contribution amount takes of course also the cover amount, which is granted for the different damages. In statutory insurance, the legislator generally prescribes minimum cover amounts. These must then be adhered to. Some insurers are flexible and offer higher coverage. For personal injury and property damage, the coverage must amount to at least 3 million euros. The deductible can usually be selected individually. Here there are graduations, to which the insured ones must hold. The differences that result from the contributions are different.

Change and termination of public liability insurance

Like any insurance, the public liability is based on a contract and this can of course be terminated. The cancellation must be made in writing by the liability insurance trade. For a proper termination, a time window of 3 months must be adhered to. Before you cancel your contract, you should be sure to have found a favorable liability insurance . So compare the services exactly and pay attention to possible extras of the providers . The termination takes place at the end of the term. Some insurers offer here the service to terminate the contract with the old provider. You have a special right of termination in the case of public liability only if it increases the contributions, but the benefit side remains unaffected.

Public liability insurance is business expense
You can deduct the costs incurred by the liability insurance industry. The company liability is one of the company insurances. Accordingly, it is an operating expense, which reduces the profit and thus the tax burden.


Business liability insurance represents an important safeguarding of existence

Again and again the question arises with companies whether the conclusion of a public liability insurance is really worthwhile. Certainly, the contributions are not small, especially for individual company sizes and in individual sectors, but a conclusion should not be waived. Costs resulting from claims settlements that you have to make can quickly amount to several thousand or ten thousand euros. These demands pose a threat to the existence of every business and every entrepreneur. You are protected against this risk by the public liability insurance. The insurer takes over the regulation in case of damage and also fights for your rights. Already as a freelancer you should not give up this protection. But the liability insurance comparison is worthwhile, because the differences on both the contribution and on the performance level are large.