Social Security Contributions in Poland for Supervisory Board members
Are you running a company and planning to appoint a supervisory board? Or are you already serving as a board member and wondering if you are subject to mandatory Social Insurance Institution insurance?
This article will explain to you what obligations are associated with the remuneration of a supervisory board member, and when it is necessary to notify Social Insurance Institution and pay contributions.
Compulsory contributions for supervisory board members: Who, when and why?
According to Article 6(1)(22) of the Social Security Law, supervisory board members who receive remuneration for their function are subject to mandatory pension and disability insurance.
However, a supervisory board member is not subject to sickness and accident insurance, but will be subject to mandatory health insurance if he or she is domiciled in Poland.
Note: If you serve as a supervisory board member unpaid, you are not required to report for social insurance and pay social insurance contributions. However, once you start collecting a salary, the contributions will be mandatory from the first day of their payment.
From when do the contributions start? We explain the rules
Insurance obligation arises:
- from the day you are appointed as a member of the supervisory board and begin to perform the function of a member of the supervisory board for a fee.
- It lasts until the cessation of the function.
The place of residence of a member of the supervisory board (in Poland or abroad) is irrelevant to the social insurance obligation.
Compulsory pension and disability insurance covers:
- all members of supervisory boards who receive remuneration on this account,
- members of supervisory boards in companies with such a body.
Social Insurance Institution contribution base
- Pension and disability insurance: The basis for contributions is the remuneration of a supervisory board member as income from activities performed personally by persons belonging to supervisory boards, regardless of the method of their appointment.
- What is not included in the base? Salary for incapacity for work due to illness or seclusion due to an infectious disease, sickness and accident insurance benefits, and rehabilitation benefits are excluded.
Health contribution: There are no exceptions to the obligation
The basis for calculating the health contribution is the salary of the board member, less the amount of pension and disability insurance contributions. From such a base, a health contribution of 9% of the base is calculated. It should be noted that this contribution is also paid when the remuneration for serving as a supervisory board member does not exceed PLN 200.
When are contributions to the Labor Fund paid?
Contributions to the Labor Fund are charged if the basis of assessment for pension contributions is at least the minimum wage per month.
In the event that a board member’s pension contributions come from different sources, and when added together on a monthly basis are higher than or equal to the minimum wage, the Labor Fund contribution must also be paid. The amount of this contribution is 2.45% of the contribution assessment calculated on the same basis as for pension contributions.
Exception: Labor Fund contributions are not charged when a board member has reached the age of 55 for women and 60 for men.
Confluence of insurance titles: No exceptions for the supervisory board
In the case of supervisory board members, acquiring the right to a pension or having another title to social insurance does not affect the obligation of pension and disability insurance for serving as a supervisory board member.
Any supervisory board member who draws, even a small salary, must be registered for pension and disability insurance, and contributions must be calculated and paid by the contributor.
Even if a supervisory board member pays pension and disability insurance contributions from his own business as an entrepreneur, or if his employer pays these contributions for him, he must also pay these contributions from his paid role as a supervisory board member.
Summary: Is every board member subject to Social Insurance Institution?
Every member of the supervisory board who receives remuneration for performing his function:
- Is subject to mandatory pension and disability insurance.
- Is subject to health insurance.
Only those who serve unpaid are exempt from reporting to Social Insurance Institution and paying contributions.
Do you have questions? Contact our team of labor law experts at [email protected]