The Act e.g. imposes from 1st January 2015, the obligation on members of supervisory boards to pay retirement and disability pension contributions. The pension contributions will be assessed on the revenue received by supervisory board members for performing their function and will be withheld and paid by the entity to which the supervisory board belongs.
The justification of the bill to the above Act underlined that the development of the capital market had brought an increase in the number of supervisory board members who neither perform work under the employment contract or any other contract nor conduct business activity other than agricultural activity and who derive their income from personally performed activities consisting in the supervision of various entities or institutions. In addition, supervisory board members with the employee status are not entitled to receive remuneration for the time when they are released from work because they have to participate in the supervisory board meetings. The loss of remuneration due to participation in supervisory board meetings should be compensated by a separate remuneration for being a supervisory board member. According to the current legislation no social insurance contributions have to be paid on such remuneration. This implies a lower amount of benefits payable to a supervisory board member if an insured event occurs.
The aforementioned act stipulates that the insurance obligation will apply to all persons sitting in supervisory boards and receiving remuneration for their function, regardless of whether they are otherwise obliged to pay social insurance contributions or receive retirement or disability pension. It was resolved that such persons would be subject to social insurance contributions throughout their membership in a supervisory board for a consideration – that is, not earlier than from the date of their appointment to the date of their departure from the board.
However, supervisory board members will have to pay neither sickness nor accident insurance contributions.
Source: Rödl & Partner Newsletter
Date: 10.12.2014
