Activities performed in person - what is worth knowing?

Service Business

Theoretically, the matter of an activity performed in person is simple. However, in practice, it turns out that many people do not even realize that they are dealing with it. Moreover, some confuse it with running a business. Meanwhile, activities performed in person do not need to be registered anywhere. It is performed on the basis of various types of contracts. Below we present its detailed specifics.

Tax turmoil

A person who conducts business in person is subject to personal income tax on general principles, with two tax thresholds:

  • up to PLN 85,528, the tax is 18 percent. minus the tax reducing amount PLN 556.02;
  • over PLN 85,528 the tax amounts to PLN 14,839 02 gr. + 32 percent surplus over PLN 85,528.

The monthly amount reducing the tax is PLN 46.33, and the annual amount is PLN 556.02. If the revenues from activities performed in person are the only revenues obtained in the tax year and do not exceed the tax-free amount, i.e. PLN 3,091 (annual income), annual returns are not necessary. However, it is worth submitting them, because this way you will recover tax advances collected during the tax year by the payer. Such an annual tax return is submitted on the PIT-36 form.

The revenue issue

Revenues from activities performed in person are revenues received from:

  • a management contract;
  • contracts for specific work or mandate for entrepreneurs, legal persons and organizational units without legal personality (but not for the benefit of the public) or the owner or manager or administrator acting on his behalf, where the services are performed only for the real estate;
  • creative activity: journalistic, educational, scientific, artistic, literary and coaching;
  • science, culture, journalism and art competitions;
  • doing sports;
  • sports scholarship;
  • performing the function of a referee at sports competitions;
  • activities of clergy (but not under an employment contract);
  • social or civic activity (including compensation for lost earnings);
  • arbitration activities - Polish arbitrators participating in proceedings with foreign partners;
  • performing the function of a member of the management board, supervisory board, committee or other bodies constituting legal persons (regardless of the method of appointment);
  • participation in committees appointed by self-government or state authorities or administration;
  • activities commissioned by authorities, local government or state administration, as well as by the court and the public prosecutor's office (experts in court, investigative and administrative proceedings, public collectors and payers, provided that they are not natural persons running a business who charge themselves remuneration).

The matter of contracts

Contract for specific work and order

  • Personal performance of services on the basis of a specific task or mandate contract is performed only for entrepreneurs, legal persons and organizational units without legal personality (but not for the benefit of the public).
  • It is possible to perform activities personally for two principals. The second principal has the same payment obligations as the first principal, taking into account the scope of social insurance at the first principal. As a result, the contractor receives two PIT-8B forms and takes both of them into account in the annual settlement.
  • However, if services are performed personally for the former employer, a mandate contract can be concluded with him and then the former employer becomes the payer and is obliged to: and collecting advances for income tax (PIT-4), issuing PIT-8B to the contractor and taking into account flat-rate tax deductible costs.
  • When a person carrying out an activity in person provides services to the former employer at the same time and has an employment relationship with the current employer, then both employers have the same payment obligations, except that compulsory health insurance contributions will be deducted only once. Then the person carrying out the activity personally balances the income at the principal - the former employer (PIT-8B, includes the flat-rate tax deductible costs) and the income obtained at the current employer (PIT-11, takes into account the employee tax deductible costs).
  • If the person carrying out the activity personally provides services to the former employer and private persons, then the former employer remains the payer only until the first income from the provision of services to private persons is obtained. Then, a person who carries out an activity in person must fulfill all the obligations imposed on him by the regulations concerning natural persons undertaking non-agricultural economic activity and ceases to be a person who earns income from activity performed in person. Since then, the former employer-principal has been issuing invoices and bills. The current entrepreneur submits an annual settlement on the PIT-36 form, in which he takes into account both income from personal and non-agricultural business activities. In addition, he is entitled to lump-sum tax deductible costs for the period of performing the activity in person.
  • However, it is worth noting that it is possible to concurrently account for income from non-agricultural business activity (PIT-5, the entrepreneur has the right to reduce the income only by the documented tax-deductible costs in the actual amount) and from activities performed in person (the settlement is made by the payer). But only if the subject of economic activity does not coincide with the subject of activity performed personally. At the end of the year, such a person submits PIT-36 and settles income from both personal and business activities.

Management contract

Generally, a management contract is a legally unnamed contract, but operates on the basis of a mandate contract. In the case of a management contract based on activities performed in person, the flat-rate tax deductible costs are not taken into account - a 20% advance tax is collected on the income obtained and only the health insurance premium may be deducted from it. Therefore, it is more profitable to account for revenues as part of business activities.

However, when the management contract was concluded as part of the performance of the activity in person, then the revenues from the management contract are included in the annual settlement, they are added to other revenues and settled on general principles.

Creative activity

The situation here is similar to the contracts of mandate and contracts for specific work. If a contract for a specific task or commission is concluded, the employer deducts the advance tax, taking into account the flat-rate forms of obtaining income - 20 percent. or 50 percent depending on whether, for example, the article is related to the sale of copyrights.

In the case of a contract for specific work, the employer is not obliged to report the person performing the activity in person to social insurance. However, when it comes to a mandate contract, the employer acts as the payer of health and social insurance contributions. Such a payer issues a PIT-8B, on the basis of which a person who conducts business personally makes an annual tax settlement.

It is worth noting that the activity performed in person does not have to be addressed only to the company (tax obligations rest with the payer), it can also be performed for the benefit of a private person, but then the tax obligations rest with the person performing the activity personally.

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Activities performed personally for the property owner

In the case of activities performed in person for the property owner, services are provided solely for the purposes of the property, therefore similar services cannot be performed for the benefit of the public and a similar contract cannot be concluded simultaneously with another owner of a similar property (unless other types of services are provided for the property owner). ). Otherwise, the person performing the services is personally obliged to register non-agricultural business activity.

At the same time, a given property owner is the principal only if he does not conduct business activity, is not a legal person and pays the tax office only for obtaining rental income.

It is worth looking at the conditions of running a business personally, because the line between business and business is really thin. And in both cases, different restrictions apply and failure to comply with them may result in serious consequences. Therefore, people who carry out an activity in person not only need to be aware of the fact that they are dealing with it, but also should have some knowledge about it in order to perform it in accordance with applicable law.

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