On 18 September 2018 The government has adopted a bill on the Solidarity Fund for Disabled Persons, which assumes that the payment of the solidarity tax will be charged to the wealthiest citizens, including, in particular, entrepreneurs conducting one-person business. In this case, it may be worth considering turning your business into a capital company. This conversion entails a number of changes, including those concerning employee settlement.
We have already written about the bill on the Solidarity Fund for Disabled Persons on pages Russell Bedford in the article “A solidarity Denmark as an impulse to become a company. ”
The bill assumes that the revenue of the Disabled Persons Support Fund will be:
- 1) the compulsory contributions to the Fund, the amount of which will be determined by the budgetary act, will be collected by the Social Insurance Institution, including the contribution to the Labour Fund,
- 2) the solidarity rate referred to in Chapter 6a Act dated 26 July 1991 on personal income tax (Dz. i.e. of 2018, item 1509, 1540. I 552, 1629, 1669 and 1693),
- 3) interest on the funds of the Fund remaining on separate bank accounts, the obligation to establish which derives from existing provisions or contracts, at the disposal of the head of the organisational unit carrying out the task financed by the Fund,
- interest on free financial resources transferred to the management of the Minister competent for public finances under the conditions laid down in the rules issued on the basis of Article 78g Act of August 2T 2009 On Public Finances (Dz. i.e. of 2017, item 2077, ed.[2]);
- additional fee in question under Article 24(1a) Act dated 13 October 1998 on the social security system (Journal of Laws of 2017, item 1778, as amended[3]);
- Other revenue.
The most wealthy citizens will be obliged to pay the solidarity tax, including in particular entrepreneurs operating one-man economic activity, so it may be worth considering turning their business into a capital company. The process of such conversion is not excessively complicated, but requires legal and factual preparation, so that the new company takes over the running of the current business as soon as it is converted (the company's entry in the KRS business register)
It follows from the above that the obligation to pay the solidarity tax will be borne by the wealthiest citizens, including in particular entrepreneurs operating one-man economic activity, so it may be worth considering the transformation of their activities into a capital company. The process of such conversion is not overly complicated, but requires legal and factual preparation, so that the new company takes over the running of the existing business at the time of conversion (the company's entry in the KRS business register).
Please note that the new transformed company will obtain its own NIP number and become a separate taxpayer from the existing one-man entrepreneur. It is therefore necessary to examine the functioning of the company in advance, so that there are no perturbations in relations with counterparties and public administrations at the time of conversion.
In an individual interpretation of 14 September 2018 number 0111-KDIB2-1.4010.267.2018.2.AT The Director of KIS referred to the inclusion in the cost of obtaining income for employees' salaries and contributions due from these salaries in the event of the transformation of a single-member entrepreneur into a capital company.
The request for interpretation indicated that the applicant is a single-person business operator and intends to transform that activity into a single-member capital company in a way Article 551(5) Act dated 15 September 2000 Commercial Companies Code.
The applicant shall, in the course of a single business activity, employ staff on the basis of a contract of employment to which remuneration is paid in accordance with the provisions of the Staff Regulations and remuneration 10. the day of the month following the month for which they are due.
ZUS contributions shall be paid in the month following the month in which the remuneration is paid, i.e. by 15. the day of the month following the month in which the remuneration is paid.
On the same terms the remuneration and contributions of ZUS will be paid in the transformed Company of O.o., which will take over the duties of the employer.
It was assumed that the transformation would take place in first days of January 2019, Thus, the converted company to 10 January 2019 will pay employees remuneration for December 2018, and to 15 February 2019 will withdraw to the Social Security Institution the contributions due related to the remuneration paid for December 2018
Therefore, the following questions were asked:
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Is the remuneration due for December 2018 paid in January 2019 by the Company z o.o., will be the costs of obtaining revenues for the Company from the O.o. in January 2019?
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Do ZUS contributions (in part financed by the employer) on the remuneration for December 2018, paid by the Polish limited liability company. after the day of conversion, will they be the cost of obtaining the revenues of the Polish limited liability company. in the month of their payment?
In response to these questions, the Authority took the following position:
Ad. Question No 1:
According to Article 15(4g) the Corporate Income Tax Act, claims on titles in question under Article 12(1) and 6 Act dated 26 July 1991 on income tax on individuals and social security benefits paid by the undertaking of employment constitute the cost of obtaining income in the month for which they are due, provided that they have been paid or made available within the time limit resulting from the provisions of labour law, contract or other legal relationship between the parties.
In the event of a failure to comply with that time limit, those amounts shall apply. Article 16(1)(57).
The remuneration of employees employed on a contract of employment shall be the cost of obtaining income in the month for which these salaries are due if they have been paid within the time limit laid down in the labour law (including the remuneration rules) or the contract concluded.
Therefore, staff salaries due for the month of December 2018 to be paid by 10 January 2019 may constitute the cost of obtaining revenue for the month of December 2018, i.e. for the month for which they will be due. Consequently, they cannot be at the expense of obtaining the revenue of the Company, which has not yet been created.
Ad. Question No 2:
By contrast, Article 15(4h) the Corporate Income Tax Act, contributions to claims in question Under section 4g, specified In the Act dated 13 October 1998 on the social security system, in part financed by the payer of contributions, contributions to the Labour Fund and the Guaranteed Workers' Benefits Fund, subject to Article 16(1)(40), shall be the cost of obtaining revenue in the month for which they are due, provided that contributions are paid:
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- for claims paid or made available in the month for which they are due, within the period resulting from separate provisions;
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- for claims paid or made available in the following month, within the period resulting from the provisions of labour law, contract or other legal relationship between the party - no later than 15 the day of that month.
In the event of failure to comply with those deadlines, those contributions shall be applied Article 16(1)(57a) and section 7d.
If, therefore, social security contributions (ZUS contributions) related to remuneration for December 2018, the company will pay to 15 February 2019, based on Article 15(4h)(2) in conjunction with Article 16(1)(57a) the Corporate Income Tax Act, then they will be at the expense of obtaining the income of the company at the time of their actual payment, i.e. in the month in which the Applicant will no longer function as a natural person conducting a single business activity (it will be converted into a company with a limited liability).
On the margins of the above, it should be pointed out that in case of conversion, the Social Security Office needs to be changed in the scope of the contribution payer. According to ZUS, employees of the former one-man entrepreneur should be deregistered and registered as employees of the transformed company.
Author:
Aleksandra Księżyk – Legal advisor, Director of the Legal Department in Warsaw Chancellery Russell Bedford Dmowski and Partners Law Firm sp. k.