Remuneration of the members of the management board of a Polish limited liability company. Taxation and social insurance (ZUS)

Appointment to the management board should be understood in the category of a legal act under which the appointment of the management board is effectuated, which materializes upon the formulation of the appointment act, initiating the organizational (corporate) relationship of the appointed person with the company on the basis of which the given the person obtains the status of a management board member and performs the rights and obligations associated with this status.

Remuneration for performing the function of a member of the management board in a Polish limited liability company

The basis for performing the function of a member of the management board may be:

• employment based on an employment contract,
• employment under a civil law contract for the provision of services,
• appointment by resolution of the shareholders’ meeting.

The catalog of persons subject to compulsory retirement and disability pension insurance

The catalog of persons subject to compulsory retirement and disability pension insurance is specified in art. 6 of the Act on the Social Insurance System, making the occurrence of this obligation dependent not on the financial aspects of the function performed, but on the form in which the member of the management board was appointed to the position. The above-mentioned provisions do not include the insured persons acting as the president or vice-president of the management board of the company, provided that this function is not performed under the legal relationship specified in this provision (e.g. employment contract, civil law contract).

As a consequence, the mere appointment – pursuant to the provisions of the Commercial Companies Code – to the position of the president or vice-president of the company’s management board, as well as the achievement of the remuneration determined by resolution, does not result in the emergence of social security obligation, if it is not related to the creation of a specific title to be covered by the obligation of social insurance indicated in art. 6 of the Act on the Social Insurance System, as a result of e.g. conclusion of an employment contract or a civil law contract.

Management board of Polish sp. z o.o. and an employment contract

In the jurisprudence, it is commonly expressed that it is permissible to be appointed to the management board of a company and work under an employment contract at the same time. The employment relationship is a separate legal relationship from membership in the management board of a limited liability company, and in its scope a member of the management board is a third party to the company; the content of the employment relationship decides about the content of his employment rights.

The remuneration charged for performing the function of a member of a Polish limited liability company

Appointment to the management board of a limited liability company, as well as recalling it, only results in the creation or termination of an organizational relationship. Whether the company has a different legal relationship with a management board member is determined by such events as, for example, conclusion of an employment contract or contract of mandate. The mere appointment of the president or vice-president of the company’s management board, as well as the achievement of the remuneration determined by resolution, does not yet result in the creation of a social security obligation, if it is not related to the emergence of a specific title to be covered by social security obligations as a result of e.g. employment contract or civil law contract. The remuneration charged for performing the function of a member of the company’s management board is not subject to compulsory social insurance. The remuneration of a member of the management board (usually established in the act of appointment) is the remuneration constituting income from activities performed in person and is taxed at source in Poland.