Tax card and employment of employees under a mandate contract

Service-Tax

A tax card is a very simple form of taxing certain types of business with income tax. This simplified method of taxation can only be used by taxpayers who conduct a strictly defined economic activity listed in the annex to the act. The tax card limits the accounting to a minimum (in practice, it is only invoicing). However, when carrying out activities subject to a tax card, we must remember that it is necessary to meet all the requirements set out by the act, including those relating to employment.

Who can be taxed on the basis of a tax card?

Pursuant to Art. 2 clause 1 point 2 of the Act of November 20, 1998 on flat-rate income tax on certain revenues earned by natural persons (i.e. Journal of Laws of 2016, item 2180, as amended), hereinafter referred to as the "Lump-sum Act", natural persons who generate income from non-agricultural business activity may pay a flat-rate income tax in the form of a tax card.

Pursuant to Art. 23 paragraph 1. of the Lump-sum Act, a flat-rate income tax in the form of a tax card may be paid by taxpayers conducting business activity:

  • service or manufacturing and service, specified in part I of the table constituting Annex 3 to the Act, hereinafter referred to as "the table", to the extent specified in Annex 4 to the Act - with employment not exceeding the status specified in the table;
  • service in the field of retail trade in food, beverages, tobacco products and flowers, with the exception of beverages with an alcohol content exceeding 1.5% - under the conditions specified in Part II of the table;
  • service in the field of retail trade in non-food products - under the conditions specified in part III of the table, with the exception of trade in motor fuels, means of motor transport, parts and accessories for motor vehicles, agricultural tractors and motorcycles, and with the exception of trade in non-food products covered by the license;
  • catering - if there is no sale of beverages with an alcohol content of more than 1.5% - under the conditions specified in part IV of the table;
  • for transport services performed with the use of one vehicle - in the conditions specified in part V of the table;
  • in the field of entertainment services - under the conditions specified in part VI of the table;
  • for the sale of home meals in apartments, if the sale of beverages with an alcohol content exceeding 1.5% is not conducted - under the conditions specified in Part VII of the table;
  • in the professions, consisting in the provision of services in the field of human health protection - under the conditions specified in part VIII of the table;
  • in liberal professions, consisting in the provision of veterinary services by veterinarians, including the sale of veterinary preparations (PKWiU ex 21.10.51.0, ex 21.20.13.0, ex 21.20.21.0 and ex 21.20.23.0), in connection with the services provided - under the conditions set out in Part IX of the table;
  • in the field of home care for children and sick people - in the conditions specified in part X of the table;
  • in the field of educational services, consisting in giving lessons by the hour - under the conditions specified in part XI of the table.

The flat-rate tax in the form of a tax card may also be paid - on the terms and under the conditions specified in Part XII of the Table - by natural persons, including farmers simultaneously running a farm.

Tax card and hiring employees

A taxpayer, when deciding to tax in the form of a tax card, must remember that his activity has certain limitations. The legislator found that some taxpayers taxed with a tax card cannot use the help of people who are not employed by them. In the light of Art. 25 sec. 1 point 3 of the lump sum act, taxpayers conducting the activities referred to in Art.23, are subject to taxation in the form of a tax card, if they do not use the services of people who are not employed by them under a contract of employment, and the services of other enterprises and establishments, unless it is specialized services. According to Art. 25 sec. 3 above of the Act, for specialist services within the meaning of para. 1 point 3, activities and works falling within the scope of activity other than the reported one, necessary for the complete performance of the product or service provided, including the accompanying activities and works referred to in Annex 4.

Tax card amount - number of people employed

When conducting business taxed in the form of a tax card, it should be remembered that the legislator has introduced employment limits. At this point, it should be remembered that taxpayers conducting activities specified in the above-mentioned art. 23 sec. 1 points 1-6 may be taxed in the form of a tax card also when this activity is conducted in the form of a civil law partnership, provided that the total number of partners and employees does not exceed the employment status specified in the table - as provided for in Art. 25 sec. 5 of the Lump-sum Act. Thus, partners of the company are treated in the same way as employed persons.

In the cases referred to in Art. 25 sec. 5, the amount of income tax in the form of a tax card is determined at the rate specified for the employment status corresponding to the total number of partners and employees (Article 26 (2) of the above-mentioned Act). The greater the number of employees, the higher the tax card rate, i.e. the legislator made the amount of the tax card rate dependent on their number.

Who do we consider an employee when taxed in the form of a tax card?

From the content of art. 25 sec. 6 of the Lump-sum Act it follows that when assessing the conditions justifying taxation in the form of a tax card and determining the amount of income tax in relation to the taxpayers referred to in art. 23 sec. 1 point 1, up to the number of employees:

  • it also includes persons employed under a home contract and family members with a permanent or temporary residence other than the taxpayer,
  • does not include:
    • family members living in a common household with the taxpayer, and if the business is conducted by partners - only family members of one of the partners,

    • persons employed for the purpose of apprenticeship or training to perform a specific job, in accordance with separate provisions on apprenticeship or training to perform a specific job - during the apprenticeship or apprenticeship period, and no more than three people employed in the first twelve months after passing the exam ; Secondary school students and students employed during summer and winter holidays are treated on an equal footing with persons employed for the purpose of apprenticeship or training to perform a specific job,

    • (deleted)

    • employees employed only in the sale of products, accepting orders for services, maintaining cleanliness in the plant, keeping the cash register and accounting, drivers and escorts - provided that the taxpayer has specified in writing the scope of activities of these employees,

    • persons on whose account the activity is conducted after the taxpayer's death, if these persons do not take part in the business,

    • no more than four unemployed graduates assigned, on the basis of separate regulations, by the competent labor office to internship with an employer for a period not exceeding twelve months,

    • a total of no more than three unemployed employees or graduates - within the meaning of the provisions on employment and counteracting unemployment - registered with the employment office, and the period of registering an unemployed person with the employment office must last at least 6 months in the period immediately preceding his employment.

To sum up, not every person who cooperates with the taxpayer can be considered an employed person.

Employment of a person under a mandate contract

Employing employees may result in an increase in the card rate or the loss of the right to this form of taxation. A taxpayer subject to a tax card may not use the services of persons not employed under an employment contract or the services of other establishments. Taking the above into account, a taxpayer subject to a tax card cannot employ people other than under an employment contract. Thus, it cannot employ persons under a mandate contract.

Example 1.

The taxpayer runs a hairdressing salon (hairdressing services), the activity is taxed with a tax card. Due to the large number of clients, in May (communions) he decided to hire an additional person. The taxpayer hired a second hairdresser on the basis of a mandate contract. The above resulted in the loss of the possibility of settling the activity on the basis of a tax card. The taxpayer, wanting to continue to be taxed with the tax card, could not hire a hairdresser on the basis of a mandate contract.

Of course, it is not always possible to use the services of persons employed on a mandate contract. If the taxpayer, while conducting business activity taxed in the form of a tax card, cooperates with a person providing specialized services on the basis of a concluded contract of mandate, this does not affect the possibility of taxing the activity in the form of a tax card. The above-mentioned contract of mandate does not affect the amount of income tax in the form of a tax card.

Example 2.

The taxpayer runs a hairdressing salon (hairdressing services), the activity is taxed with a tax card. In connection with the rental of a new premises, he decided to renovate it. The taxpayer hired an interior decorator on the basis of a mandate contract. An employed decorator (specialist) is to help arrange a hairdressing salon. The above will not result in the loss of the possibility of settling the activity on the basis of a tax card. The taxpayer hired a specialist under a mandate contract to perform specialized activities.

The above is confirmed by the individual interpretation of the Director of the Tax Chamber in Bydgoszcz of March 19, 2012, number ITPB1 / 415-17 / 12 / HD.

Therefore, the above means that in the situation described in the application, the Applicant, on the basis of a specific work contract or contract of commissioning an artist, a sculptor or a carpenter, to perform specialist services referred to in Art. 25 sec. 3 of the Act on flat-rate income tax on certain revenues earned by natural persons, does not affect the amount of income tax in the form of a tax card, i.e. it will not increase the Applicant's tax rate.