Employees relatively often face the issue of switching from an employment agreement to a B2B contract. Let’s consider the income tax consequences of establishing B2B cooperation with the former employer (or current).
Self-employment?
The debate on the permissibility of self-employment (or cooperation within B2B) resurfaces in public discourse from time to time. Although the so-called entrepreneur’s test is not yet mandatory, authorities have tools to question such arrangements. However, this post does not concern whether we are indeed dealing with a B2B contract.
PROVIDING SERVICES TO THE FORMER EMPLOYER – ZUS BENEFITS
We discussed this topic in a previous entry:
B2B cooperation with the former employer – flat tax
Art. 9a section 3 of the Personal Income Tax Act
3. If the taxpayer who has chosen the method of taxation referred to in section 2 [here: flat tax], will obtain revenues from the provision of services to a former or current employer, corresponding to activities which the taxpayer or at least one of the partners:
1) (repealed),
2) performed or performs in the tax year
under an employment or cooperative employment relationship, the taxpayer loses the right to taxation in the tax year in the manner specified in Art. 30c and is obliged to pay advances on the income earned since the beginning of the year, calculated using the tax scale referred to in Art. 27 section 1, and late payment interest on arrears in respect of these advances. (…)
Therefore, switching to B2B with an employer with whom an employment contract was in force in the same tax year deprives the right to use the so-called flat tax.
However, this limitation is not as broad as in the case of ZUS. It only applies to specific activities performed within a given cooperation.
B2B cooperation with the former employer – lump-sum of taxation
Art. 8 section 2 of the Lump Sum Act
3. If a taxpayer running a business independently or in the form of a company, who has chosen lump-sum taxation on recorded revenues, obtains income from this activity from the sale of commercial goods or products or from the provision of services to a former or current employer, corresponding to activities that the taxpayer or at least one of the partners:
1) performed in the year preceding the tax year or
2) performed or performs in the tax year
under an employment relationship or a cooperative employment relationship, the taxpayer loses the right to taxation in the form of a lump sum on recorded revenues in the tax year and, starting from the date of obtaining this revenue until the end of the tax year, pays income tax on general principles.. (…)
Therefore, switching to B2B with an employer with whom an employment contract was in force in the same tax year or in the previous tax year deprives the right to use the so-called lump sum of taxation. This means that the grace period is longer than in the case of a flat tax.
This limitation is also not as broad as in the case of ZUS. It only applies to specific activities performed within a given cooperation.
Summary
In this respect, it should be said that basically switching to B2B as part of cooperation with a former employer (within the last 2 years) deprives the taxpayer of the right to the so-called lump-sum of taxation. In the same tax year, you are deprived of the right to the so-called flat tax. Of course, there are exceptions to this rule, and this exclusion can have very serious consequences. The most important of them is the need to pay tax according to general rules in a given tax year.
If you have any questions regarding settlements within B2B cooperation with an employer or how to protect yourself in case of an audit, feel free to visit www.outsourced.pl .
