Secondary employment is widespread phenomenon. There are no any questions about the registration and payroll for employeesworking under the conditions of secondary employment. But there are some difficulties with the taxation nuances. We make it clear in the following.
PIT
The subject to the personal income tax (hereinafter − PIT) is the total monthly (annual) taxable income. According to sub-paras.164.2.1 of Art.164 of the Tax Code of Ukraine (hereinafter − TCU), this income of a taxpayer includes incomes in the form of wages, accrued (paid) to the taxpayer in accordance with the terms of the employment agreement (contract). Therefore, the salary of external secondary job employee is the subject to the PIT at the rate of 18% on a general basis.
When incomes accruing in the form of wages, the taxation base should be defined as gross payroll reduced by the amount of the tax social benefits, if it is available (para. 164.6 of Art. 164 of TCU).
When an internal secondary employment, the subject to PIT is the employee’s total revenue received from employer (payment on the principal place of employment and payment for work of secondary employment) under the general rules of wages taxation.
USC
As it is known, from January 1, 2016 the unified social contribution (hereinafter – USC) is accrued on the income of the secondary job employee on a general basis in the amount of 22%. The USC (3.6%) is not withheld from the employees’ wages any more.
The USC is accrued on the amount of accrued wages by types of payments that include principal and additional salary and other incentive compensation payments, including in kind determined in accordance with the Law of Ukraine “On payment for labour” of 24.03.1995, № 108/95-ВР (hereinafter − the Law on payment for labour). Types of payments that relate to basic, additional wages and other incentive and compensation payments, when the calculation of the unified contribution, are to be determined by the Regulations on wages statistics, approved by order of the State Statistics Service of Ukraine dated 13.01.2004, № 5 (hereinafter – Regulation № 5).
The maximum amount of USC accruing is increased from 17 to 25 sizes of living wage for the able-bodied persons this year. It means that from 01.01.2016 the maximum size is UAH 34 450, from 01.05.2016 – UAH 36 250, and from 01.12.2016 – UAH 38 750.
The remuneration for the work performed in accordance with established labour norms at tariff rates (salaries), piece rates of workers and salaries of managers, professionals and technical employees, in particular, the internal secondary employment in full are to be included in the basic wage fund (sub-para. 2.1.1 of Regulations № 5). Therefore, the maximum amount of USC accruing base for the internal secondary job employees is to be determined together the main place of work and place of the internal secondary employment.
The maximum amount of accruing base of the Unified social contribution for the external secondary job employees is to be applied separately for each place of employment.
If the USC accruing base does not exceed the minimum wage established by law for a month, when income received, the amount of USC is calculated as the product of the minimum wage established by law for a month, when income (profit) received, and USC rates. In other words, the employer should make additional payment of USC to the minimum insurance contribution, when the wages payment to the employee below the minimum.
What should be done when the secondary job employee works part-time at the company, and his/her salary is lower than the minimum wage? There is an exception for the secondary job employee in this case. Namely in the case of payroll (incomes) to individuals from sources not at the main place of work, the rate of USC is to be applied to certain accrual basis, regardless of its size.
The wage of employee at the main place of work and secondary employment should be reflected separately in Table 6 of Annex 4 to the Report on the amounts of accrued Unified social contribution for obligatory state social insurance. Because in the mentioned table is to be filled requisite 20 “Sign of present of work record book (1 − yes, 0 − no)”. This requisite is filled with “1”, if the person is working on the basis of a labor agreement with registration of work record book and with entering a record of employment there, or the value “0” − if the person works as a secondary job employee.
