In today's blog article, we will summarise the situation with statutory deductions from the remuneration of cooperative members who do not perform work for the cooperative on the basis of an employment relationship.
Health insurance
For the purposes of health insurance, natural persons are considered to be employees if they receive income from dependent activities in accordance with the provisions of Section 6 of Act No. 586/1992 Coll., on Income Taxes.
However, the Act on Public Health Insurance (No.48/1997 Coll.) provides for several exceptions, including members of cooperatives who do not have an employment relationship with the cooperative, but perform work for the cooperative for which they are remunerated by it and did not achieve countable income in the calendar month. As of 1 January 2021, the amount of countable income is set at CZK 3,500.. In other words, the remuneration of a cooperative member is subject to health insurance if it amounts to at least CZK 3,500 per month.
Social insurance
The conditions of participation of cooperative members in sickness and pension insurance are regulated by Act No. 187/2006 Coll. and 155/1995 Coll. Members of the cooperative, if they perform work for the cooperative outside the employment relationship, are covered in the months in which they have achieved a countable income of at least CZK 3,500. Unlike health insurance, the maximum assessment base for social insurance is CZK 1,701,168 in 2021.
The insurance shall commence on the date on which the member of the cooperative starts work and shall cease on the date of the end of the period of employment.
The type of gainful activity on the pension insurance record sheet is the letter "O" in the first character of the code.
Income tax
The remuneration is subject to income tax on employment income under Section 6(1)(b) of the Income Tax Act. If a member of a cooperative makes a tax declaration, the income is subject to advance tax at a rate of 15% for the part of the tax base up to 4 times the average wage and 23% for the part of the tax base exceeding 4 times the average wage. If a member of the cooperative does not make a tax declaration, remuneration not exceeding CZK 3,500 per month is subject to withholding tax, and above this amount to advance tax.
Employers' liability insurance
The statutory employer's liability insurance for damages in the event of an accident at work or occupational disease (see Decree No. 125/1993 Coll.) does not apply to the remuneration of cooperative members.
In this payroll and personnel program, the performance of work by a cooperative member outside the employment relationship is recorded in the employment window as a type of 6 - without employment contract and the type of relationship 5 - member of the cooperative.
