Recently, we have been receiving a large number of inquiries regarding the tax consequences of concluding a low-value mandate contract. The doubts mainly concern whether tax-deductible costs can be settled in relation to such a contract of mandate (or a contract for specific work). How to settle such a contract and what should you pay attention to?
Low-value mandate contract – PIT
To begin with, it is worth emphasizing that income from activities carried out personally should, as a rule, be taxed according to general principles. Therefore, in this case we apply the tax scale (tax-free amount, 12-32%), with the possibility of deducting the costs of obtaining income. However, this does not apply to all situations.
There is a category of income covered by the so-called flat-rate income tax. This situation concerns a mandate contract concluded with a person who is not an employee of a given entrepreneur, the value of which does not exceed PLN 200.
Pursuant to art. 30 section 1 point 5a of the Personal Income Tax Act – a lump sum income tax is levied on income (revenues) (in the amount of 12% of income). This applies to revenues referred to in Art. 13 points 2 and 5-9, if the amount due specified in the contract concluded with a person who is not an employee of the payer does not exceed PLN 200.
As far as PIT is concerned, both a contract for specific work and a mandate contract (below PLN 200) are included in the same category of income in accordance with Art. 13 point 8 of the Personal Income Tax Act.
What does this mean in practice?
Since the tax is a lump sum, the tax base in this case is revenue, with no right to reduce it. Therefore, we do not take into account many factors such as tax-deductible costs, tax-free amount, tax relief for young people, etc.
Such remuneration does not add up to the taxpayer’s other income and is not included in PIT-11.
The company that has concluded such an agreement acts as the payer and is obliged, among others, to: to collect an advance payment, pay it and submit an annual PIT-8AR declaration.
Low-value mandate contract – ZUS
The provision in question has no consequences in the context of different contributions (ZUS) for both types of contracts. Therefore, when considering the need to cover such contracts, we must refer to general principles. The most important difference between a mandate contract and a contract for specific work (including low-value contracts) is the need to be subject to ZUS contributions.
a) A contract for specific work (not concluded with your own employee) is not subject to ZUS contributions.
However, an issue worth paying attention to is the need to report to ZUS the fact of concluding contracts for specific work.
b) The mandate contract is subject to ZUS contributions. The matter of the ZUS contract and payment of (a) health insurance contributions and (b) the so-called social contributions is, of course, complicated and dependent on many factors.
Use our help?
If you have any questions or concerns after reading the article, please contact us! Describe your situation in detail and your doubts. We will analyze your case and, during individual consultations, we will clarify any questions or doubts, as well as discuss the possibility of reducing tax risks.
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