Can the spouse's company be treated as an ordinary contractor?
There are more and more situations where both the wife and husband are entered separately in the CEIDG. In other words, they function as two separate entities in trade. Can the spouse's company be treated as foreign contractors?
Who is the collaborator?
Entrepreneurs may have doubts whether, when concluding a transaction with the spouse's company, she should not be treated as a cooperating person. Pursuant to the provisions of the Social Insurance Institution, a cooperating person is considered to be:
- parents or
- stepmother and stepfather,
who stay in a common household and cooperate in the performance of business activities.
The rules for employing immediate family members are similar to those for ordinary employees. The basis for employment may be an employment contract, as well as another relationship - civil law contracts. In addition, it is possible to provide work without a contract or to set up your own business by a family member, and cooperation based on a contract between companies.
The spouse's company as a contractor
There are situations in which both spouses conduct separate activities. At the same time, it would be worth considering whether, when concluding a transaction with each other and receiving payment for a service, it should be treated as income.
Pursuant to Art. 14 sec. 1 of the Personal Income Tax Act, income from activity is considered to be the amounts due, even if they were not actually received, after excluding the value of the returned goods, granted discounts and discounts. In the case of taxpayers selling goods and services subject to VAT, the revenue from this sale is considered to be revenue less the tax due.
The position on this matter was taken by the Director of the Tax Chamber in Poznań, who in the interpretation issued on December 19, 2014 (reference number ILPB1 / 415-1039 / 14-6 / AG) stated:
"Therefore, if the Applicant has provided a service to another entity and issued a VAT invoice for this circumstance, then this amount - as the amount due within the meaning of the above-mentioned recipe (Article 14 (1) of the PIT Act) - it will constitute income for the Applicant ”.
Another view on the matter was taken by the Director of the Tax Chamber in Łódź in the individual ruling of March 12, 2012 (reference number IPTPB1 / 415-18 / 12-2 / AG), stating that "in a situation where the Applicant and her husband conduct separate business activities, and the husband, as part of his business, will provide services to the kindergarten run by the Applicant, such services should not be classified as the spouse's own work, within the meaning of the Act on personal income tax. It is a service provided by a separate economic entity - a separate entrepreneur. (...) ".
Collaboration between spouses' companies can be disadvantageous
It also happens that the cooperation between the spouses' companies will be subject to additional rigors. This applies to situations when transactions are concluded between companies in which one of the spouses holds shares in the spouse's company at the level of min. 5% (they are treated as related entities). You should remember about the additional obligations imposed by the Income Tax Act - this is the obligation to keep documentation.