The Polish Deal (Polski Ład) changed how the health insurance contribution is calculated and increased the burden on entrepreneurs. In some cases the health contribution rose several times over, so entrepreneurs are looking for ways to earn income that is not subject to the health contribution. One of them is the benefits referred to in Article 176 of the Commercial Companies Code, which include a shareholder's remuneration.
Article 176 of the Commercial Companies Code and a shareholder's remuneration for non-cash services
The Commercial Companies Code states that a shareholder's obligations towards the company arise from the articles of association. Above all, the shareholder is required to make a contribution to the company. The shareholder may also be obliged to provide non-cash services to the company. Under Article 176 of the Code, a shareholder who provides non-cash services receives remuneration even when the company reports a loss. To pay remuneration for non-cash services, the type and scope of these services must be specified in the articles of association. The amount of remuneration may not exceed the prices and rates customary in trade.
What else follows from Article 176 of the Code regarding remuneration for non-cash services? Specialists running an accounting officepoint out that paying the remuneration requires the services to be recurring and non-cash in nature. In addition, the remuneration paid to the shareholder must be at market level and fully consistent with market conditions. At the same time, it is independent of the company's profit: the amount is fixed even when profits are high, and payment is mandatory even when the company reports a loss.
A shareholder's remuneration in a limited company and the health contribution
Providing non-cash services to a limited company and receiving remuneration for them is a form of tax optimisation in the company. However, remember that the shareholder must pay income tax, so they should be careful not to exceed the second tax threshold. A shareholder's remuneration for recurring non-cash services is not among the titles subject to social and health insurance contributions. As a result, the shareholder does not pay a high health contribution and the company optimises its operating costs.
The accounts of a limited company should document precisely which services the shareholder provided, to ensure the transparency of the company's activities. Their type and frequency must be justified by the company's real needs. If a non-cash service is provided in breach of Article 176 of the Code, ZUS may challenge it. In that case it may demand payment of social insurance and health contributions under separate provisions. Doubts about whether a shareholder's non-cash services are justified can be resolved by the Director of National Tax Information in an individual interpretation, but the interpretation does not guarantee real protection.
