Company costs - salaries and social security contributions

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An entrepreneur hiring employees is also a payer. This means that his duties include both the payment of remuneration for the work performed and the payment of employee social security contributions. It should be emphasized that the employer has the option of classifying these expenses as tax deductible costs, and the manner in which they will be classified will depend on the date on which the payment was made.

How do I qualify my salaries?

Pursuant to the accrual principle indicated in Art. 15 sec. 4g of the Corporate Income Tax Act, remuneration paid to the employee or made available to him, as well as cash benefits paid from social insurance, are generally included in the tax deductible costs for the month for which they are due.

It should be remembered that the condition of timely payment is met, because only then the employee's unpaid income may be included in the tax deductible costs earlier than they were paid. Pursuant to Art. 22 sec. 6ba of the Personal Income Tax Act, this regulation also applies to employers with the status of a natural person. Importantly, the payment deadline results directly from the provisions of labor law or other legal relationship between the employer and employees.

How to qualify ZUS contributions?

Classification of social insurance contributions as tax deductible costs depends on the date of payment. Contributions will be tax-deductible only upon payment. We can divide them into:

  • ZUS contributions of contractors,
  • employees' ZUS contributions paid by the employer,
  • premiums for the insurance of entrepreneurs and people who cooperate with them.

The key issue with regard to ZUS contributions for employees paid by employers is the date of payment of remuneration. The employer may include the remuneration and ZUS contributions financed by employees in the tax deductible costs of the month to which they pertain, provided that they have been paid on time (specified in the contract or the company's regulations).

In the event that the entrepreneur fails to pay the wages on time, they will be included in the costs together with the Social Insurance Institution contributions in the month in which the payment was actually made. Social security contributions financed by the employer can be classified as tax costs for the month for which the remuneration was paid. To meet this condition, the payment must be made by the 15th day of the month following the accounting month. In order to better understand the above principle, we will use some examples:

Example 1.

The employer employs 10 employees. The salary is paid at the end of each month for the month worked. The wages for the month of January were paid by the employer on 31/01/2014, and the ZUS contributions were paid on 14/02/2014.

The employer may include both salaries and paid social security contributions as tax deductible costs.

Example 2.

The employer employs 10 employees. The remuneration determined according to the internal provisions of the remuneration regulations is paid by the 10th day of the following month. Wages for the month of January were settled on February 10, while the employer paid ZUS contributions on these wages on February 15 (i.e. a month faster).

In this situation, the employer may include both salaries and social security contributions as tax deductible costs in January.

Example 3.

The employer employs 10 employees, and wages, in accordance with employment contracts, are paid by the 10th day of the following month.

Salaries for January were paid out on February 10. ZUS contributions will be paid by March 15 (with a month delay).

The employer will only include salaries in the January costs, while the ZUS contributions paid in March will become the cost of this month.

Example 4.

The employer employs 15 employees. According to the company's internal regulations, salaries are paid by the 5th day of the following month.

Due to liquidity problems, salaries for January were not paid until February 11th. Contributions for these wages were also paid on February 11 (a month faster).

The taxpayer will include the cost of wages and salaries in the deductible costs in February. However, ZUS contributions can be included in the costs of February.

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Example 5.

The employer employs 20 employees. Salaries are paid to 15 people by the end of the month for the current month worked, and to five people by the 10th day of the following month.

Salaries for January were paid as agreed, while ZUS contributions for the first group of employees on February 14, for the second group will be paid by March 15.

The taxpayer may include in tax deductible costs in January, salaries paid on January 31 and February 10, as well as part of ZUS contributions paid on February 14. In March, he will have to include in the cost contributions for wages paid on February 10.

In the case of entrepreneurs who pay ZUS contributions themselves, as well as for employed cooperating persons, there are the following options:

  • deduction of contributions from the income being the basis for calculating the income tax for the month in which the payment of social insurance contributions was made,
  • recognition of contributions as tax deductible costs.