Remuneration of a member of the management board - settlement

Service

The remuneration of a management board member may be received both as part of an appointment letter and by concluding an appropriate legal relationship between the company and a management board member based on the provisions of the Labor Code or the Civil Code. The provisions of the Commercial Companies Code do not specify the type of legal relationship between a management board member and the company.

Contribution to the remuneration of a management board member

Conclusion of an employment contract or contract of mandate with a member of the management board in the context of contributing to this contract entails the need to prepare an appropriate notification to the Social Insurance Institution, as well as to calculate social and health contributions on the general principles applicable to this type of contract. In the case of this type of employment, there are no separate provisions regarding the contribution of remuneration. The act on the social insurance system and the act on health care services financed from public funds treat them as employees or contractors. Thus, they are subject to social security and health insurance on the same terms as employees and contractors. The remuneration of a member of the management board employed under an employment contract is subject to contributions on the same terms as other employees.

A different approach in the context of contributing to remuneration is required for paid performance of the function of a management board member in a company on the basis of appointment under a resolution of the shareholders' meeting. It is not a title to compulsory social insurance and health insurance in ZUS. Thus, the person holding such a function does not report to these insurances. The appointment, which takes the form of a shareholders' resolution, means that no agreement is concluded with a member of the management board, on the basis of which the scope of activities and remuneration would be determined. Members of the management board with whom the company does not have an employment relationship, a mandate contract or another contract for the provision of services, to which the provisions of the Civil Code relating to the mandate apply, are not subject to the social security and health insurance obligations.

Remuneration of a management board member and taxation

Depending on the form in which the receivables to the management board are paid, whether on the basis of an employment contract or on the basis of an appointment, the advance payment for income tax should be calculated in a different way. The differences in the method of determining the advance tax are due to the fact that revenues from the employment relationship and revenues due to function in the company's bodies on the basis of the act of appointment itself are classified as separate sources of revenues.

Contract of employment

If a member of the management board is employed on the basis of an employment contract, it is the basis for the payment of remuneration, and in terms of taxation and other benefits, the member of the management board is treated like any other employee of the company. In the case of remuneration for a member of the management board employed under an employment contract, in order to calculate the income tax advance, the income should be reduced by the tax deductible costs and social contributions paid.

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Vocation

Performing the function of a management board member on the basis of an appointment does not qualify for social security or health insurance. Therefore, the advance tax on the remuneration of a management board member should be collected in the amount of 17% (or 32% - at the taxpayer's request), and the income decreased only by the deductible costs. These costs amount to PLN 250 monthly, and for the tax year not more than PLN 3,000 (also if the place of residence of the management board member is different from the place where the payer is located). The remuneration for performing the function of a management board member on the basis of the appointment itself, the payer should apply the basic costs. In the event of an appointment, only the standard tax deductible costs of PLN 250 can be deducted from the income. When a member of the management board performs activities on the basis of the appointment itself, the payer does not reduce the monthly advance payment by the tax-free amount specified in the first range of the tax scale when calculating the monthly advance payment.

Lump-sum income tax

A separate case is the situation in which the remuneration of a management board member does not exceed PLN 200. Then the payer charges a flat-rate tax at the rate of 17%, without deducting tax deductible costs.

Both in the case of concluding an employment contract with a management board member and appointing him to perform this function, the payer is obliged to transfer the collected income tax advance to the account of the tax office by the 20th day of the month following the month in which it was collected. The advance payment for tax is made to the tax office competent according to its seat or place of business, if it does not have a seat.