Tax department

Managerial contracts

Managerial contracts are a form of employment of civil law nature, designed for high-level employees – mostly for managing staff.

As already pointed out above, the managerial contracts are civil law agreements, not employment contracts. Therefore, any matters not specified in the contract, are to be determined by the provisions of the Civil Code, not by labour courts based on the regulations of the Labour Code.

In practice, however, the more common features between managerial contract and an employment contract, the more often the labor court deems such an agreement an employment contract.

Managerial contract frequently makes employee responsible for managing a part of the enterprise and its results. Also, the manager can count on higher salary and greater flexibility in carrying out his duties – usually contract does not include the provisions about time or place of his work.

In accordance with the provisions of the Personal Income Tax Act (PIT) and the provisions of the Civil Code, the revenue earned from managerial contract is considered to be activity performed personally.

This causes that person bound by contract, must carry out his tax duties on the basis of the progressive income tax rate. Deduction of deductible expenses is possible only through a lump sum.

CGO Legal Law Firm provides consulting services concerning managerial contracts, as well as services of drafting such contracts, which will not be deemed employment contract.

If you are interested in gaining more information feel free to contact us.