The Ministry of Finance, in the Update of Convergence Program (UCP), presented its plans for upcoming years.  Below we present a brief summary of selected points relevant from HR perspective.

• The entrepreneur’s test

In 2020, the Ministry of Finance plans to introduce the so-called “entrepreneur test”.  Its purpose is to limit the scale of an unauthorized classification of income received by individuals as income from individual business activity.  This is regarding market’s well-known practice of self-employment of people who do not really bear the economic risk and are not legally responsible for the effect of their work (which is typical for people conducting their own business activity) and in practice perform the same tasks as regular employees. Such a solution results in lower personal income tax and social security burdens both for the employee (contractor) and the employer (principal).
The Ministry of Finance’s goal is to make the "entrepreneur test" a tool to determine who is a real entrepreneur and who is not.  How will this test look like, what form will it be carried out in, what will its effects be and whether it will also be used retrospectively - it is not yet known. We can, however, assume that it will be based on criteria of economic and organizational dependence between the entrepreneur and his/her contractor(s), as well as the entrepreneur's responsibilities and associated legal risks he/she bears. 

• Waiver of annual cap for pension and disability contributions

The Ministry of Finance brings back the idea of waiving the annual cap for pension and disability social security contributions effective as of 2020. Thus, the contributions for this kind of insurances would be due from the employee's total income, similarly to sickness and accident contributions. We would like to remind you that in November 2018 the Constitutional Tribunal decided that the Act regarding waiver of annual social security cap is inconsistent with the Constitution.  However, this judgment was based only on the identified deficiencies in the law-making process and therefore, does not constitute an obstacle for passing an amendment to the law that will effectively waive this limit.

• Social security contributions from the so-called “junk contracts“

The Government also plans to introduce changes regarding pension and disability contributions from the so-called “junk contracts“ (contract of mandate, contract for specific work). The purpose of this change is to limit situations in which civil-law contracts were signed instead of standard employment contracts from which both the employee and employer are obliged to pay “full” social security contributions.

The abovementioned solutions, supported by Mandatory Disclosure Rules (introduced to the Polish legal system from 1 January 2019), may result in significant increase of the employment costs for some people providing their services on the basis of B2B model.

We monitor the works on the UCP and will inform you about its further progress. 

In the meantime, please feel free to contact us if you would like to discuss possible impact of these changes on your business and to plan relevant action in advance.

CONTACT:

Katarzyna Serwińska
Tax Advisor/ Partner
katarzyna.serwinska@raczkowski.eu

Tomasz Kret
Senior Lawyer
tomasz.kret@raczkowski.eu