The idea of Deputy Finance Minister Filip Świtła, who wanted to introduce an entrepreneur test, was rejected by Prime Minister Morawiecki, but at the same time Minister Emilewicz recalled that the government has other tools to help determine whether the status of self-employment is real.
Continuous changes to legislation aim, among other things, to seal the tax system and thus to combat tax avoidance situations. The entrepreneur test would allow verification close 2,000,000 Self-employed and identify those who pretend to be entrepreneurs. Those by which, according to the Ministry of Finance, the Treasury loses every year even 1,200,000,000 PLN.
Punishing fictitiously self-employed
Given the black scenarios of carrying out the entrepreneur's test, we can assume that at the time of the US's "detection" of fictionally self-employed, they would lose the status of the entrepreneur and that all invoices issued by them would be considered as "empty invoices". As a result, it would be necessary to correct the VAT cleared, as the counterparty would lose the right to deduct the VAT on that basis.
It should be remembered that the government can already use the tools that exist in the Polish legal system to verify the status of its activities
Self-employed people can benefit from, for example, a linear tax calculation and lower ZUS contributions. They would be forced to switch to another type of employment if they lost their status.
If they were employed for a job interview, they would be obliged to pay higher social security contributions and would also be accounted for according to 32% the rate of income tax on individuals. Moreover, ZUS and the tax office may request that the backlog of the past few years, including interest.
Self-employed workers, losing their status, would also have to pay a tax on deducted expenses, as the absence of a company means that there is no possibility of spending to calculate the cost of obtaining revenue.
This could ultimately put the self-employed at risk for huge amounts that they would have to bring to the Social Security Office and the tax office.
The tax office can already deprive self-employed of the tax benefits of the status of entrepreneur. A tool that would allow such a test to be conducted, even without controlled knowledge, so without the term "entrepreneur test" can be a file analysis JPK VAT sent by all traders.
This analysis allows, inter alia, to verify invoices issued only one the contractor.
It should be taken into account that the government is seeking to seal the tax system also because of its attempt to implement its spending plans, while the "entrepreneur test" of verifying and depriving an entrepreneur of self-employed status would help him to implement it due to additional revenue to the state budget.
How do you identify a fictional self-employed person?
Act dated 26 July 1991 on personal income tax (Journal of Laws of 1991, item 350) specify the criteria according to which the person does not carry out business activities.
Article 5b the above-mentioned PIT Act containing a negative definition of non-agricultural economic activity states that:
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Non-agricultural economic activities shall not be considered to be activities if the following cumulative conditions are fulfilled:
- 1) liability to persons third for the outcome of these activities and their execution, excluding the responsibility for the performance of unlawful acts, shall be borne by the ordering officer;
- 2) they are carried out under the management and at the place and time designated by the contracting authority;
- 3) carrying out these activities shall not bear the economic risk associated with the activities carried out.
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If the non-agricultural business is carried out by a company which is not a legal person, the income of the shareholder from the participation in such a company, determined on the basis of Article 8 revenue from participation in the company, in joint ownership, revenue from non-agricultural activities. 1, shall be considered as revenue from the source in question under Article 10 revenue sources. 1 point 3.
There have been voices that the government wants to introduce statutory recognition of cooperation agreements in favour of one only an entity for an employment relationship – such a solution would give offices a strong argument to reject self-employed status (on this subject we wrote in the article “Worker or entrepreneur? Employment contract and cooperation agreement in current case law")
The tax office and the Social Security Office have the possibility to verify that the formal requirements imposed on self-employed persons are met and that they do not actually provide their services at the premises of the counterparty.
Typically, contracts between fictitious self-employed and contractors impose certain working hours at the company’s premises, which makes it much easier for the tax office to work, as officials have the right to examine the cooperation agreement.
Moreover, the same officials have the right to interview all persons working at this company to identify fictionally self-employed.
In conclusion, it can be concluded that there is no certainty that abandoning the name "entrepreneur test" does not mean that we will not hear about new tools to verify the fictional self-employed for a long time.
It is also not known whether this name will ever appear in the proposals for the proposed amendments – despite the Prime Minister's declaration that it will not happen.
However, it should be remembered that the government can already use the tools that exist in the Polish legal system, which enable verification of the status of activities.
Author: Paweł Boś, Law student at Leon Kozminski Academy in Warsaw, employee Russell Bedford