The employer may reduce the tax base for the remuneration of the posted worker by 30% of the value of the daily allowances. The provisions also prescribe the possibility of reducing the social security contribution base of the seconded employee. In this article, we will present the institution in question and explain how to apply it.
1. Secondment and delegation
Before explaining the rules for reducing the social security contribution base, it’s necessary to explain the difference between delegation and secondment. Indeed, the institution of such a reduction applies only in the case of employees seconded to work abroad. It can’t concern a worker on a delegation.
The concept of delegation was defined by the legislator in Article 775 § 1 of the Labour Code. This provision states: An employee who, at the employer’s request, performs a professional task outside the city where the employer’s head office is located or outside the regular place of work shall be entitled to receivables to cover the costs related to the business travel.
Therefore, the delegation takes place in the event that a worker has received a business order to travel and during this trip performs a business task. The task in question shall be carried out outside the city where the employer’s head office is located or outside the regular place of work. However, the departure doesn’t result in a change of place of work. Indeed, the delegation is incidental in nature.
There’s no statuory definition of secondment in any legal act. However, it has been clarified by doctrine and practice. A secondment is presumed to occur if there is a temporary change of the employee’s place of work. The condition for this change is the conclusion by the parties of the employment relationship of an international secondment addendum, i.e. an agreement providing for a change of the employee’s place of work.
2. Reduction of the social security contribution base – legal basis
The legal basis for reducing the social constribution base is § 2(1)(16) of the Regulation of the Minister of Labour and Social Policy of 18 December 1998 on detailed rules for establishing grounds for calculating contributions to the pension scheme (i.e. Official Journal of 2023, item 728, as amended), hereinafter referred to as the regulation. This provision states: The following revenue doesn’t constitute the constribution base: part of the remuneration of workers whose revenue is higher than the average remuneration referred to in Article 19(1) of the Act, engaged abroad with Polish employers, excluding the persons referred to in Article 18(12) of the Act – in the amount equivalent to a daily allowance for business trips abroad, for each day of stay, specified in the provisions on the amount of and conditions for determining receivables due to an employee working in a state or local government budgetary unit for a business trip abroad, with the reservation that the monthly revenue of these persons determined in this way, constituting the contribution base, can’t be lower than the amount of the average remuneration referred to in Article 19(1) of the Act.
3. Condition to benefit from reduction
It’s possible to benefit from the reduction of the contribution base only if the worker’s revenue is higher than the average remuneration. In 2023, it amounts to PLN 6,935.00.
In a situation where the employee’s revenue is lower than the average salary, it’s impossible to benefit from the reduction. In other words, in the event that the worker obtained income lower than the average remuneration, the provision of § 2(1)(16) of the regulation doesn’t apply.
It should be noted here that if an employee works in Poland and abroad in the same month, the amount of the average salary can’t be reduced proportionally to the period of stay abroad. Proportional reduction in the amount of average remuneration shall not be made also in the event that the worker was ill or was on holiday leave for part of the month.
4. Employee’s revenue
Before reducing the contribution base, it’s necessary to determine the value of the income to be reduced. Article 18(1) and (2) of the Act of 13 October 1998 on the social security system (i.e. OJ 2023, item 1230, as amended) applies here. Therefore, it’s necessary to take into account all remuneration components which constitute the basis for contributions which the worker has received in a given month, regardless of the period for which they are due. Remuneration for period of incapacity for work as a result of illness or isolation due to a contagious disease isn’t included.
It should be noted that in the event that the employee has provided work both in the country and abroad in a given month, the total income received by the worker, i.e. the revenue obtained in Poland and abroad, shall be taken into account when determing the revenue.
5. Amount of reduction
The contribution base is reduced by the product of the number of days of stay abroad and the value of foreign daily allowances.
The amount of daily allowances for individual countries is specified in the regulation of the Minister of Labour and Social Policy of 29 January 2013 on the receivables due to a worker employed in a state or local government budgetary unit for a business trip (OJ 2013, pos. 167, as amended).
“Days of stay abroad” are considered to be any day of stay abroad. They also include non-working days during the secondment period, i.e. Saturdays and Sundays. On the other hand, days during which the employee was on sick leave or holiday leave aren’t taken into account.
6. Exchange rate
The salary of a posted worker is usually set in euros. The value of foreign daily allowances has also been denominated in foreign currencies. In order to properly settle the remuneration, the amounts in question should be converted into zlotys. This should occur according to the average exchange rate of foreign currencies announced by the National Bank of Poland on the last working day preceding the day of obtaining revenue (Article 11a(1) of the Personal Income Tax Act of 26 July 1991 (i.e. OJ 2022, pos. 2647, as amended)).
7. Reducing the value of the social security base in practice
In order to benefit from § 2(1)(16) of the regulation, the employee’s revenue shall be determined in the first place. If it’s lower than the average wage, the reduction can’t be used. On the other hand, in the event that this revenue exceeded the amount of the average remuneration, it’s possible to make a reduction. For this purpose, the product of the days of stay abroad and the value of daily allowances should be substracted from the revenue. If the result is lower than the average wage, contributions are calculated from the amount of average remuneration. If the result is lower than the average wage, contributions are calculated from the amount of average remuneration.
8. Legal notice
The study is a work within the meaning of the Act of 4 February 1994 on Copyright and Related Rights (OJ 2006, No. 90, item 631, consolidated text, as amended). Publishing or reproducing this study or its part, quoting opinions, as well as disseminating in any other way the information contained therein without the written consent of Crede sp. z o.o. is prohibited.
