Who is payer of single contribution during the execution of agreement on joint activities without formation of legal entity?
Part 1 Article 1130 of the Civil Code of Ukraine № 435-IV as of 16.01.2003, as amended, (hereinafter – CCU) stipulates that parties (participants), under agreement on joint activities, undertake to act jointly without formation of legal entity to achieve a certain goal that does not contradict the law.
Participant's contribution is considered to be everything that he/she brings to the joint activity (joint property), including monetary funds, other property, professional and other knowledge, skills and abilities, as well as business reputation and business connections (Part 1 Article 1133 of the CCU).
Accounting of joint property can be entrusted to one of the participants (Part 2 Article 1134 of the CCU).
At the same time, Sub-paragraph 14.1.139 Paragraph 14.1 № 14 of the Tax Code of Ukraine № 2755-VI as of 02.12.2010 with changes and amendments (hereinafter – TCU) stipulates that for taxation purposes, two or more persons who carry out joint activities without formation of legal entity are considered by an individual within such activity.
Accounting of results of joint activities is carried out by the taxpayer authorized to do so by other parties according to the terms of agreement, separately from accounting for economic results of such taxpayer.
Clause 2 of Paragraph 1 Article 4 of the Law of Ukraine № 2464-VI as of 08.07.2010 "On collection and accounting of single contribution to obligatory state social insurance" with changes and amendments (hereinafter – Law № 2464) stipulates that payers of single contribution to obligatory state social insurance (hereinafter – single contribution) are employers:
enterprises, institutions and organizations, other legal entities formed according to Ukrainian legislation, regardless of the ownership form, type of activity and management, which use employment of individuals under terms of employment contract (agreement) or under other conditions provided for by the law, or under civil law contracts (except for the civil law contract concluded with individual-entrepreneur, if performed works (provided services) correspond to types of activities, according to information from the Unified State Register of Legal Entities, Individuals-Entrepreneurs and Public Organizations), including branches, representative offices, branches and other separate subdivisions of the specified enterprises, institutions and organizations, other legal entities that have a separate balance sheet and independently conduct settlements with insured individuals;
individuals-entrepreneurs, in particular those who use employment of other individuals under terms of employment contract (agreement) or under other conditions provided for by labor legislation, or under the civil law contract (except for the civil law contract concluded with individual-entrepreneur, if performed works (provided services) correspond to types of activities, according to information from the Unified State Register of Legal Entities, Individuals-Entrepreneurs and Public Organizations);
individuals, who provide themselves with work independently and individuals, who use employment of other individuals under terms of employment contract (agreement).
That is, such payers of single contribution are insured (within the meaning of Paragraph 10 of Part 1 Article 1 of the Law № 2464) for insured individuals.
Insured individual is a natural person who, according to the law, is subject to obligatory state social insurance and pays (has paid) and/or for whom single contribution is paid or was paid according to procedure established by the law (Paragraph 3 of Part 1 Article 1 of the Law № 2464).
Part 2 Article 6 of the Law № 2464 stipulates that payer of single contribution is obliged, in particular, to calculate, accrue and pay single contribution to the tax authority at the main payer’s accounting place of single contribution in a timely manner and in full amount; keep records of payments (income) of insured individual and calculation of single contribution for each calendar month and calendar year, store such information in manner prescribed by the law; submit reports, including on the employee's main place of work, about calculation of single contribution in amounts determined according to the Law № 2464 as a part of reporting on the personal income tax (single tax) to the tax authority at the main payer’s accounting place of single contribution in terms and procedure established by the Tax Code of Ukraine. Form in which reporting on the calculation of single contribution is submitted as a part of reporting on the personal income tax (single tax) is established by the central body of executive power, which ensures formation and implementation of state financial policy, in agreement with the Pension Fund of Ukraine and funds of the obligatory state social insurance.
It is prohibited for payers of single contribution to transfer their obligations for its payment to third parties, except for in cases where the head of a family farm pays contributions for himself and members of such farm (Part 9 Article 25 of the Law № 2464).
Therefore, participants of agreement on joint activities without formation of legal entity are insurers exclusively for their insured individuals and, accordingly, individual payers of single contribution.