What happened
Ms Ewa runs a business and has been paying instalments on her debt to the Social Insurance Institution (ZUS) for years. Over several years she has paid more than PLN 60,000, but... the principal of the debt remains unchanged - over PLN 300,000. The mechanism is simple: every payment goes first towards interest, enforcement costs and the deferral fee, and only then, if anything is left, towards the principal. ZUS adds further deferral fees every year, increasing the burden.
Why does this happen?
- Under instalment agreements and deferrals, ZUS applies a rule whereby the debtor's payment covers administrative costs, interest and deferral fees before it reduces the actual total of the debt.
- The deferral fee is a charge for the mere fact of being allowed to pay in instalments, that is, an additional fee imposed even when the business owner pays the instalments regularly.
- Frequent changes of terms and addenda to instalment agreements mean that the principal debt does not shrink, because new costs and interest are added every year.
Consequences for business owners
- A constant debt spiral - even though you pay your instalments, the principal of the arrears remains practically the same.
- Loss of motivation - this is a psychologically difficult situation: you see that despite your payments the debt is not getting smaller.
- High additional costs - the deferral fee, interest and enforcement costs significantly increase the total amount that has to be repaid.
What can be done - practical steps
- Analyse the instalment agreement - check the terms of your agreement with ZUS carefully - how much goes towards interest and the deferral fee, and how much towards the principal.
- Negotiate a better agreement - you may be able to negotiate some of the terms: lower deferral fees, smaller instalments or a larger share of the payment going towards the principal.
- Make use of case law - a resolution of the Supreme Court indicates that ZUS is obliged to issue a decision if the terms of the agreement are impossible to meet.
- Appeal - if you believe your instalment agreement is unfair or gives no real chance of reducing the debt, you can consult a lawyer and consider an appeal.
- Document and monitor - keep a record of all ZUS decisions, addenda and correspondence. It is very important to have evidence in the event of any disputes.
Our comment
This is an example of a situation in which the help theoretically offered by ZUS becomes a trap. Instead of genuinely reducing their debt, business owners end up in a mechanism where they keep paying, but the principal does not change. At Global Tax Partners we believe the law should protect those who want to repay - not keep them in permanent debt.
👉 If your ZUS instalment agreement looks similar and you want to know whether you can change it - contact us. We will analyse the terms, propose solutions and help you fight for fair treatment.
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