PIP reform. Companies are afraid of B2B transformations into an employment contract. Experts warn

Who will be controlled by PIP and what effects can it have for people on B2B?

Let's explain that although the main emphasis is on the possibility of combating apparent civil law contracts (e.g. orders) and transforming them into an employment contract, in practice it will also apply to B2B contracts. This is also confirmed by the Labor Ministry in the justification for the project. We read in it, among others, that “The proposed solutions relate to civil law contracts, including may also apply to people performing work under B2B (…) “. The ministry adds that in economic relations work as part of self -employment usually takes place in the so -called B2B formula, i.e. as part of an agreement concluded between two business entities.

Izabela Leśniewska, a tax advisor from ALO-2, adds that the changes may also apply to the relationship between the entrepreneur on the B2B contract and the foundation, association, sports union, etc.

Filip Kotarski, tax advisor and director at PwC, however, points out that In the case of labor inspection inspection, a company or company is always in the foreground. The Labor Inspectorate does not control an individual entrepreneur (on the B2B contract) and the company. However, the inspector will be able to investigate the company's agreements with people who provide her services on B2B contracts. Only then will he be able to replace the B2B contract with an employment contract. The decision of the District Labor Inspector will be immediately feasiblei.e. the order will immediately transform into an employment contract. Such a decision will also give birth to tax effects and in the scope of ZUS for the future.

As for earlier tax and contributory effects (arising before the date of the decision), they will be suspended until the date of expiry of the deadline for lodging an appeal, and in the event of an appeal to the day of a final court decision (Article 34 (2) of the draft amendment).

As Filip Kotarski says, the problem is that VAT has not been mentioned in the project (and its rules are different than PIT/CIT) and there are no clear effects as to the settlements before the PIP inspector's decision.

What will be the effects of the PIP inspector's decision for the future?

Filip Kotarski explains that the effects on The future is clear. -If, according to the decision of the PIP inspector, the B2B contract is transformed into an employment contract, then such a person stops issuing invoices from the date of issuing the decision, deregister from ZUS, stops paying advance payments to PIT as part of business activities. All these obligations are taken over by the employer – says the expert.

Of course, not always an entrepreneur whose relationship will be transformed into an employment contract ceases to be an entrepreneur, because he can also perform activities to a different scope, e.g. have other clients.

– However, if this is B2B's relationship with one entity, retrained by the inspector into an employment relationship, then the effects for the future are, in principle, clear. The employer begins to pay taxes, ZUS, sickness, pay benefits, etc. The question arises, what about the past. The regulations do not define it in a comprehensive manner, which may cause problems – says Filip Kotarski.

Was the employee who transforms the contract a legal employee?

Izabela Leśniewska points out that in connection with the planned regulations Tax authorities may ask themselves whether a given employee who obtained an employment relationship as a result of the PIP inspector's decision was legally employed.

The expert reminds that the recognition that the person was illegally employed has far -reaching consequences: the lack of the right to recognize the cost of obtaining a passage, the obligation to pay social contributions for illegally employed, etc.

What will be the problems with previous settlements, before the PIP inspector's decision?

The problem can also be with VAT. There are opinions that in connection with the decision to change B2B to an employment contract, invoices issued so far by the entrepreneur will be considered empty invoices, which would have very negative consequences – and for the invoice exhibitor and for the recipient.

Filip Kotarski does not agree with this. – Since the person had an employee relationship with the company within the meaning of the labor law, it does not automatically mean that on VAT we do not deal with the service. However, there is a risk that during the inspection the tax official will want to deprive the company that received invoices from his service provider (and currently an employee), the right to deduct VAT – says the tax advisor.

In such a situation, the expert continues, the company may ask the employee to correct the already issued invoices to zero. In the optimistic scenario, this should cause the tax office to give him a VAT, and he will then settle accounts with the company.

– The problem is that this scenario is very difficult to conduct in practice. The tax authority may not want to recognize invoices corrections and give money from VAT, and on the other hand from the company may demand a correction of input tax. It can be a delayed ignition bomb for companies. It can also cause a lot of confusion – believes Filip Kotarski.

According to Izabela Leśniewska, One can also doubt whether before the change of B2B contract we did not deal with the apparent services of services as part of business activities. – In my opinion, the PIP inspector's decision should not affect previous VAT settlements, but this does not result from the planned law – notes the expert.

As a side note, let us add that problems will also be with income tax settlements and ZUS. We paid attention to this in earlier articles.

What about benefits? People on contracts will return them?

The problem can also be with the benefits that the person received on the B2B contract, i.e. before the decision of the PIP inspector.

– Entrepreneurs' disease premium is voluntary. Since she was paid, I see no grounds to return “sickness”, to which I had the right to pay it. The more that the amount of the entrepreneur's sickness benefit is usually lower than an employee benefit of the same income (assuming the payment of the contribution from the lowest, possible basis on the activity) – says Filip Kotarski.

Izabela Leśniewska pays attention to The problem, women who obtained the right to maternity benefit during business activities (B2B contracts). – If the PIP inspector transforms them a B2B contract into an employment contract, then an obligation to return the benefit may arise. The problem is that the regulations today give people on the employment contract six months to apply for maternity allowance. And if the transformation of the B2B contract under a contract of employment occurs a year of obtaining the right to maternity, then the woman could not submit the application. Will she lose the right to maternity in such a situation? There is a legal gap here – says Izabela Leśniewska.

Another problem is related to the dates of payment of benefits. As Izabela Leśniewska explains, in the case of an order, including B2B contracts, the benefits are paid from the first day by ZUS. However, in the case of an employment contract, the first benefits are paid by the employer (for 33 days or 14 days), and then only ZUS. – What will be due to the transformation of contracts by the PIP inspector? It is not known. This may be another field for disputes – believes Izabela Leśniewska.

What to do to avoid problems in connection with the new PIP inspectors?

According to experts, in order to avoid problems as to reverse tax and contribution settlements, it is worth directly regulating in the planned regulations.

-If the tax and contribution settlements before the PIP inspector's decision, however, need to be corrected, then the designers should determine, although for what period-one year, five years? – says Izabela Leśniewska. In her opinion, If the Ministry of Labor does not clarify the project, then many problems and disputes will arise.

– Virtually every decision of the PIP inspector will be directed to the labor court, because the consequences of such a decision will be difficult to predict for both parties to the contract – warns Izabela Leśniewska.

Author: Łukasz Zalewski, journalist of the Business Insider Polska Law Department