The Minister of Finance issued public tax ruling no. DD3.8203.1.2023 on 30 March 2023 regarding the tax consequences of the payment by remitting agents of overdue social insurance or health insurance contributions.
The ruling confirms the following:
- By remitting overdue social insurance or health insurance contributions, a remitting agent discharges a public obligation that is incumbent on it and that may not be assigned to the taxpayers (its current or former employees or workers).
- Such late contributions remitted by the agent cannot be treated as having been paid “for the insureds” (current or former employees or workers), because separate regulations free them from the obligation to remit contributions at all.
- As a result, when a remitting agent has remitted overdue social insurance or health insurance contributions relating to its current or former employees or workers, then:
- they are not deemed to earn any income for the purposes of Article 11(1) of the PIT Act, and
- the agent does not acquire the status of a remitting agent for personal income tax purposes, nor does it fall within the disclosure obligation under Article 42a of the PIT Act (requiring form PIT-11 to be sent to the tax office and the taxpayer).
- Since the agent’s payment of overdue contributions does not generate income for taxpayers for the purposes of PIT Act’s Article 11(1), the related expenses of the agent cannot be deducted for tax purposes to the extent the contributions are to be funded out of the income of the taxpayers (current or former employees or workers).
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