Zero VAT for people under 26 entered into force in early August. It relates to income from work: business relations, employment relations, domestic work and cooperative employment, as well as contracts.
The income tax exemption covers revenue up to the annual limit of PLN 85 528 from 2020. In 2019, it is PLN 35 636,67.
What is the Abuse Box? It is sufficient for the entrepreneur to sign a fictitious contract with the student in such a way that the amount is within the annual tax-exempt income or approximately PLN 7 120 per month. If he adds such a contract to the cost of his business, he can save up to 16,000. tax – these are calculated by accountants.
The abuse is facilitated by the fact that once you change the terms of the order with the student, you do not need to report anywhere. As it is exempt from contributions and after 1 August also from PIT, it is not necessary to report contract revenue in settlement with ZUS or the tax office.
In practice, another method may be used. A contractor with a sham contract with a student takes risks. Controllers will be able to prove that a dummy employee never showed up at the company. Therefore, the new provisions will encourage employers to artificially inflate student pay. Just enter the contract, for example, PLN 5,000 is paid monthly, and the student pays only 2,000 in cash. That way you can generate 36,000. PLN of fictitious expenses, which will save one person about 7000 a year.
Experts point out that this is another example where the legal changes introduced are not fully considered and create a field of potential abuse.