Reimbursement of unduly paid ZUS contributions - tax consequences
It happens that the taxpayer receives a refund of unduly paid contributions from ZUS. Such a situation may, for example, result from their overpayment. In this article, we will consider what tax consequences are caused by the reimbursement of unduly paid ZUS contributions and how this event should be recorded in the tax books kept.
Overpayment of social security contributions
The treatment of overpaid contributions is specified in the Act on the Social Insurance System.
According to Art. 24 sec. 6a of this Act, unduly paid contributions shall be credited ex officio by the Institute against overdue or current contributions, and in the event of their absence - against future contributions, unless the contribution payer submits an application for reimbursement of contributions.
After finding that the contributions have been unduly paid, the payer may apply for their reimbursement. Unduly paid contributions are subject to him within 30 days from the date of receipt of the application referred to (art. 24 par. 6c-6d).
Basically, therefore, overpaid contributions are credited ex officio towards overdue or current contributions. However, if the payer submits an application for their reimbursement, ZUS is obliged to return the overpaid contributions within 30 days.
If unduly paid contributions are not reimbursed within this period, they shall be subject to interest in the amount equal to the default interest charged on tax arrears from the date of submitting the application by the contribution payer. Unduly paid contributions treated as an overpayment may be returned at the request of the contribution payer.
Tax qualification of ZUS contributions
In the general concept of ZUS contributions, there are three types of contributions. We distinguish between:
contributions for retirement, disability, sickness and accident insurance;
health insurance premiums;
contributions to the Labor Fund (FP) and the Guaranteed Employee Benefits Fund (FGŚP).
Tax regulations differently qualify a specific contribution in the context of a tax settlement.
First of all, let us point out that pursuant to Art. 26 sec. 1 point 2 lit. a) the PIT Act, the contributions paid by the taxpayer in the tax year directly to their own retirement, disability, health and accident insurance are deductible from income. Moreover, in the case of social contributions, the taxpayer may also include them in tax deductible costs.
However, the situation is different in the case of health insurance premiums. Pursuant to Art. 27b paragraph. 1 point 1 of the PIT Act, health insurance premiums paid reduce the calculated tax. Compared to social contributions, health contributions are deducted from tax and not from income.
However, when it comes to contributions to the FP and FGŚP, please refer to the content of Art. 22 sec. 6bb of the PIT Act. This provision stated that the contributions in part financed by the payer of contributions, contributions to the Labor Fund, the Solidarity Fund and the Fund of Guaranteed Employee Benefits, subject to Art. 23 sec. 1 paragraph 37, are tax deductible costs in the month for which these fees are due, provided that the contributions will be paid.
Summarizing the above, we can therefore indicate that:
contributions for retirement, disability, sickness and accident insurance reduce the tax base, provided that they were paid in the tax year;
health insurance premiums are deducted from income tax, provided that these premiums were paid in the tax year;
contributions to FP and FGŚP are tax deductible, if paid.
Depending on what type of ZUS contribution we are dealing with, the way of their recognition in the tax settlement will be different. However, it can be indicated that the common denominator here is the need to actually pay contributions.
Reimbursement of unduly paid social security contributions - tax treatment
As we have already shown, in each case it is necessary to pay the premium in the tax return.
The above also affects the way of recognizing overpaid contributions, because in this case the taxpayer should include in the calculations the contributions in the amount actually paid, even if they were overstated.
This issue also translates into the subsequent return of unduly paid contributions, in such a situation the taxpayer should not correct the period in which the undue contribution was paid, but this fact should be settled on an ongoing basis, i.e. in the period in which the taxpayer receives a refund .
We previously indicated that the overpayment of contributions may either be set off against the current contributions or the payer may apply for a refund.
If the overpaid contributions are credited to current receivables from ZUS, then in a given period the taxpayer should reduce the calculated income by social security contributions, tax for health insurance contributions and include the costs of contributions to FP and FGŚP, the amounts paid, i.e. reduced by previously overpaid contributions.
However, we will have to deal with a different situation when the taxpayer submits an application to ZUS for the reimbursement of unduly paid ZUS contributions and receives this refund.
In this case, the content of art. 45 sec. 3a of the PIT Act, according to which if the taxpayer, when calculating the tax due, made deductions from income, the basis for calculating the tax or tax, and then received a refund of the deducted amounts (in whole or in part), in a tax return submitted for the tax year in which he received this reimbursement will add the amounts previously deducted accordingly.
It therefore means that the reimbursement of overpaid contributions, which were previously deducted, must be added to the income in the annual tax return. Remember that the addition takes place only in the annual tax return, and not at the stage of determining tax advances.
This is also the result of, inter alia, from the interpretation of the Director of KIS of 18 August 2017, No. 0112-KDIL3-1.4011.143.2017.1.IM. The treatment of unduly paid ZUS contributions depends on the manner of handling such contributions. If the taxpayer applies for a refund, this amount increases the taxable income. If, on the other hand, the taxpayer counts them towards the current liabilities towards ZUS, then the overpaid contributions should be settled in the current periods.
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Keeping records of the reimbursement of unduly paid ZUS contributions
The mentioned Art. 45 sec. 3a of the PIT Act indicates that the reimbursement of unduly paid contributions that were previously included in the tax return must be shown in the annual tax return.
It should be noted here that this type of return is shown only in the annual tax return, which means that the taxpayer does not record this event in the tax books.
As a consequence, the reimbursement of unduly paid ZUS contributions should not be included in the tax book of revenues and expenses. In the event of receiving a refund of unduly paid ZUS contributions, the taxpayer recognizes this event only in the annual tax return for the year of receipt of the refund. The received return should not be included in the tax book of revenues and expenses. Summarizing the topic, it should be pointed out that the circumstance of unduly paid contributions may be analyzed differently in the context of tax regulations. If the taxpayer receives a refund from the Social Insurance Institution, this amount should be added to the income in the annual tax return for the tax year in which the taxpayer received the refund.