Management contract with an entrepreneur - taxation and social security contributions
At the very beginning of considering taxation and contributions to a management contract, it is worth considering what exactly it is. Well, it is a special form of employment that has not been separated and named in the provisions of labor law or civil law. The subject of such an agreement is the management of an economic entity - on its basis, the employed person (manager) undertakes to run and manage the enterprise. The other party's responsibility is to pay the manager's fees for the work done. The management contract is an unnamed contract, therefore it can be treated as both an employment contract and a mandate contract. In such a case, the actual nature of the contract will be determined by its content.
I will hire a manager (under contract) immediately
If a person manages the company on the basis of a civil law managerial contract, his work is characterized by freedom and independence. This is a natural effect of employment under a mandate contract. Moreover, in a situation where the employer would try to too intensively control the working time of such a manager, hold him accountable for him and limit his independence in managing the company, then a suspicion of the existence of an employment relationship may arise. Employing a manager is also associated with his full responsibility for the decisions taken and their consequences. Depending on the contractual provisions, there may be a right to claim compensation for such failure. In a situation where an employment management contract is signed, the said compensation is limited to three times the employee's salary. The remaining regulations in this respect obviously depend on the detailed provisions of the concluded contract.
Management contract with an entrepreneur - taxation
The revenues that the taxpayer has obtained under the management contract are subject to income tax. They are included in revenues from activities performed in person. However, in this case, it is necessary to include three conditions in the contract:
- defining the conditions for the performance of activities,
- the provision that the manager ordering the performance of activities is liable to third parties for them.
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If the above-mentioned the conditions are met, then the remuneration under the contract constitutes income from activities performed personally, which should be taxed on general principles. In the case of managerial contracts, the situation is similar to other contracts (employment or mandate) - every month the employer deducts an advance on the income tax from the awarded remuneration. This is due to the fact that also in this case, the tax payer is the company for which the manager provides services.
When it comes to settling the expenses incurred under the management contract in the costs of the conducted activity, it should be remembered that there is a top-down rate here - no more than PLN 250 can be deducted from the tax base per month, even in the case of commuting to the workplace from another city. The annual costs of the management contract amount to PLN 3,000.00, and in the case of performance of contracts of this type for more than one entity, the costs may not exceed PLN 4,500.
By the end of January following the end of the tax year, the entrepreneur hiring the manager is required to submit a PIT-11 declaration to the tax office (competent for the contractor's address of residence), i.e. information on the income earned and advances paid from the manager's fee. The same document should also be provided to the employee, but here the deadline expires on the last day of February.
At this point, it should be emphasized that management services provided under the management contract are exempt from VAT if the contract contains all the elements listed in Art. 15 sec. 3 points 3 of the Act on tax on goods and services.
A management contract with an entrepreneur - social security contributions
A manager who performs the contract as part of his business and only earns income under this specific contract, is subject to ZUS insurance under this contract. In this case, it is entered in the settlement documents with the code 04 11 (the person performing the agency contract, mandate contract or contract for the provision of services). The company employing the manager pays for him contributions for social and health insurance, as well as for the Labor Fund and the Guaranteed Employee Benefits Fund (of course, if it is not exempt from these contributions).
If, on the other hand, the manager obtains income from two titles (i.e. from the contract and from the conducted activity), then there is a convergence of insurance titles. In this case, insurance premiums should be paid for the first one. At his request, the manager may also be covered by retirement and disability insurance for other titles or simply change the title. The last option, however, has some limitations - the change can only be made when the manager's remuneration under the contract is higher than the lowest base for calculating business contributions. It should be remembered that the health insurance premium is obligatorily paid for each title.