Managers will pay higher contributions to the Social Insurance Company (ZUS)
On 17 June 2015, the Supreme Court, by virtue of a resolution of seven judges, file ref. no. III UZP 2/15, dispelled any doubts regarding the amount of social insurance contributions paid by members of the management board who - as part of the conducted non-agricultural business activity - provide management services to a company. In such cases, it is debatable whether the base of social insurance contributions is the actual revenue obtained by managers or the base is fixed as for entrepreneurs (60% of the forecast average monthly pay announced by the Central Statistical Office [GUS]).
Judicature to date has been inconsistent in respect to whether in the presented circumstances the basis of social insurance will be a contract for management services, treated equally to the contract of mandate, or the conducted business activity. Deciding that members of the management board should pay contributions as persons conducting business activity [sole traders] in practice resulted in much lower contributions in vast majority of cases.
However, the Supreme Court did not accept interpretation of laws that is favourable to managers and explicitly adjudicated that the basis of social insurance of members of the management board of a joint-stock company who entered into a contract for management services as part of the conducted non-agricultural activity is a contract for services (Art. 6(1)(4) of the Social Insurance System Act of 13 October 1998 – consolidated text: Journal of Laws of 2015 item 121).
Consequently, the amount of social insurance contributions should be calculated on the basis of revenue actually generated on account of services provided under the contract for management services.
The discussed act became a legal principle, and the interpretation contained in it has been binding since the date of passing it, i.e. 17 June 2015.