Contract between the company and the member of the Management Board as a natural person
The easiest method to enable a member of the Management Board of a company to receive a salary is concluding a contract with such a member. It can be done in a way of classic employment agreement, as well as any other – e.g. civil contract. However, the former is connected with varied requirements of labour law regime, such as adequate work time, mandatory length of leave and lack of freedom in dismissal of the employee. Civil contract is a more flexible possibility that does not consist on such limiting requirements.
Both abovementioned types of a contract should provide certain remuneration. In vast majority of cases, submitting a member of the Management Board to the national insurance and an advance payment of income tax by the company will be necessary. However, when it comes to the amount of remuneration, it can be freely determined by certain bodies of companies provided in the Commercial Companies Code. What is worth noting, provisions constituting minimal wage are applicable in both types of a contract (in 2021 minimal wage is equal to 2,800 PLN gross in employment agreements and 18.30 PLN gross per hour in civil contracts).
Member of the management board as an entrepreneur – B2B contract with a company
Recently, collaboration on a B2B (Business-to-Business) basis, so a collaboration between two entrepreneurs (the company and the member of the Management Board), has gained in popularity. It is used when a member of the Management Board is a sole trader (and is registered in the CEIDG – Central Register and Information on Business Activity). In such a case, the agreement between the member and the company can take form of a service contract, on basis of which the contractor receives remuneration in exchange for fulfilment of certain tasks. B2B model is especially beneficial for the company, since obligations connected to the accounting of the contract (insurance contributions, advance payments of income tax) are transferred to the member of the Management Board. Such possibility might be also beneficial for the member of the Management Board (in case of relatively high remuneration), since a sole trader can choose a flat tax as a way of taxation (i.e. 19% without any thresholds) and incur lower insurance premiums.
Management contract is a relatively new way to start a collaboration between a company and its member the Management Board. It can be said that it is, in fact a contract for managing, which combines the elements of a civil contract, or a contract for specific work. Technically, this type of a contract is not regulated by Polish law. Under the management contract, the manager (so the member of the Management Board) undertakes to run the business of the trustee (so the company). In the absence of statutory limitations in freedom of creating such management contract, the contract gives significant degree of autonomy in making decisions concerning the management of the business to the manager.
The ways of contributing to the national insurance and payment of tax are dependent on whether the member (the manager) is a natural person or a sole trader. The former connects those obligations with entrusting company. The latter, however, connects them with the sole trader.
Lack of contract – shareholders’ resolution on remuneration
Existence of a contract and contributing for national insurance are not necessary conditions to remunerate a member of the Management Board. Receiving remuneration in exchange for acting as a member of the Management Board is possible under a resolution of shareholders. Usually, such a remuneration takes for of a fixed, monthly amount and is not dependent on the moment of appointment to the board (which means – the appointment to the Management Board does not entail by itself the obligation to remunerate the member of the Management Board). However, there are no obstacles to make this payment payable with a different frequency or even only one time (e.g. in a form of an annual bonus). Such matter depends on the will of all shareholders.
Regardless of whether the remuneration is fixed or incidental, it constitutes income, so is subject to income tax. However, it is not relevant for the National Insurance contributions and is not subject to such contributions.
Choice of method of receiving remuneration out of acting as a member of the Management Board depends on various factors, mostly on the perspective from which we research the matter. Generally, classic collaboration with a member being an entrepreneur as well as remunerating on a basis of a resolution of the shareholders are the most comfortable types for companies. But when it comes to the members themselves, such a choice will depend on concrete situation in which they are currently in – whether they are entrepreneurs or whether they receive remuneration from a different source.