{"id":5054,"date":"2024-12-10T14:27:58","date_gmt":"2024-12-10T14:27:58","guid":{"rendered":"https:\/\/assistpro.lt\/?p=5054"},"modified":"2024-12-11T07:40:42","modified_gmt":"2024-12-11T07:40:42","slug":"salary-based-on-shareholders-resolution","status":"publish","type":"post","link":"https:\/\/assistpro.lt\/en\/salary-based-on-shareholders-resolution\/","title":{"rendered":"Salary Based on Shareholders&#8217; Resolution \u2013 An Effective Way to Optimize Costs"},"content":{"rendered":"<div align=\"justify\">\n<p>A limited liability company (Sp. z o.o.) is one of the most popular <a href=\"https:\/\/assistpro.lt\/en\/what-are-the-steps-for-setting-up-a-business-in-poland\/\">business forms<\/a> in Poland, as it allows for the separation of personal assets from the company\u2019s assets. This form is often chosen due to limited liability for the company\u2019s obligations and other advantages. However, one of the significant problems faced by Sp. z o.o. owners is double taxation.<\/p>\n<h2 style=\"text-align: center;\"><strong>Double Taxation in Sp. z o.o.<\/strong><\/h2>\n<p>Since a Sp. z o.o. operates as a separate legal entity, its profits are first taxed with corporate income tax (CIT):<\/p>\n<ul>\n<li><strong>19% standard rate<\/strong>, or<\/li>\n<li><strong>9% preferential rate<\/strong> for companies with annual revenues not exceeding 2 million EUR.<\/li>\n<\/ul>\n<p>However, the problem arises when the <a href=\"https:\/\/assistpro.lt\/en\/areas-of-activity\/establishing-a-transport-company-in-poland\/\">company<\/a> decides to pay dividends to its shareholders. Such profits are taxed again \u2013 with a <strong>19% income tax<\/strong>. This double taxation often becomes a financial challenge for businesses.<\/p>\n<h2 style=\"text-align: center;\"><strong>Solution: Salary Based on Shareholders&#8217; Resolution<\/strong><\/h2>\n<p>Instead of paying dividends, shareholders can choose an alternative method \u2013 <strong>board member salary<\/strong>. This is an effective solution that allows for avoiding double taxation and optimizing costs.<\/p>\n<p><strong>Taxation of Board Member Salary<\/strong><\/p>\n<p>Board member <a href=\"https:\/\/assistpro.lt\/en\/areas-of-activity\/legal-services-accounting-and-tax-consultancy-in-poland\/accounting\/\">salaries<\/a> are considered income from personal activity, and the following tax rules apply:<\/p>\n<ul>\n<li><strong>12% rate<\/strong> applies to annual income up to 120,000 PLN.<\/li>\n<li><strong>32% rate<\/strong> applies to income exceeding 120,000 PLN per year.<\/li>\n<li><strong>9% health insurance contribution<\/strong> \u2013 applies to all board members.<\/li>\n<li>There are <strong>no ZUS contributions<\/strong>, which further reduces overall costs.<\/li>\n<\/ul>\n<p><strong>Exception for Foreigners<\/strong><\/p>\n<p>If a board member is a <a href=\"https:\/\/assistpro.lt\/en\/areas-of-activity\/legal-employment-of-a-foreigner-in-poland\/\">foreigner<\/a> and holds an A1 form (confirming they are insured in another EU country), they are not required to pay health insurance contributions.<\/p>\n<p>In the case of appointment, the board member has the right to reduce their income by standard related costs, similar to those applicable in employment relationships. Additionally, a portion of the advance payment can be deducted, reducing the tax burden, if the board member submits the PIT-2 form, where this information is indicated.<\/p>\n<p><span style=\"color: #ff0000;\">If a board member earns up to 120,000 PLN per year and holds an A1 form confirming they are insured in another EU country, their income is only subject to <strong>12% income tax<\/strong>.<\/span><\/p>\n<p>The A1 form allows the exemption from health insurance contributions in Poland, while the income tax rate remains <strong>12%<\/strong>, provided the annual income does not exceed 120,000 PLN. If the income exceeds this limit, the <strong>32%<\/strong> rate applies.<\/p>\n<h2 style=\"text-align: center;\"><strong>Why Choose This Approach?<\/strong><\/h2>\n<p>A board member\u2019s salary, determined by shareholders&#8217; resolution, is an attractive way to avoid double taxation and optimize company costs:<\/p>\n<ul>\n<li><strong>Lower taxes<\/strong> \u2013 the salary is not subject to dividend tax, and the absence of ZUS contributions further reduces the financial burden.<\/li>\n<li><strong>Flexibility<\/strong> \u2013 the salary can be paid regularly or as a one-time payment, depending on the company\u2019s financial situation.<\/li>\n<li><strong>Legal security<\/strong> \u2013 properly drafted shareholders&#8217; resolutions allow for legal and effective management of company finances.<\/li>\n<\/ul>\n<p>Sp. z o.o. provides many opportunities for tax optimization. One of them \u2013 salary based on shareholders&#8217; resolution \u2013 is not only an effective but also a simple way to reduce the tax burden and avoid double taxation. When properly documented, this solution ensures financial efficiency while maintaining full <a href=\"https:\/\/assistpro.lt\/en\/areas-of-activity\/legal-services-accounting-and-tax-consultancy-in-poland\/legal-services\/\">legal<\/a> compliance.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>A limited liability company (Sp. z o.o.) is one of [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":5049,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-5054","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Salary Based on Shareholders&#039; Resolution \u2013 An Effective Way to Optimize Costs - Assistpro.lt<\/title>\n<meta name=\"description\" content=\"Cost Optimization, Board Member Salary, An Effective Way to Optimize Costs, An Alternative to Dividends in Poland\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/assistpro.lt\/en\/salary-based-on-shareholders-resolution\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Salary Based on Shareholders&#039; 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