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Not everything Soviet-style socialism did was necessarily bad!

TGC sent in the following piece on Polish social fund contributions. By way of background, please note in Poland the social fund of a Company is a totally different matter to social insurance. It is a nice tax-neutral way of evening out undesirable disparities in standard of living within Companies. In the socialist past it was an obligatory matter, but now is more of a discretionary instrument an has been often overlooked by international companies investing in Poland, some of whom could actually be saving tax money and keeping more of their value-added for their own people if they made judicious use of it. That’s why the amount per employee has a maximum annual level, but no minimum level. Many companies are not using it at all, and Western companies have shunned it when they hear the word “social” and know it is something that was dreamed up in the Socialist past, and are thus paying too much tax!

However, it’s not effective in every situation – a small group of employees will not make it worthwhile, in fact you need 20 to start one. If you have say over 50 people in Poland, and you have no social fund, then you should probably reconsider, if you have between 20 and 50 you may also want to reconsider or at least weigh it up. Contact me or TGC for more details.

Dear Quoracy.com subscribers,  Companies which employ at least 20 full-time employees can establish a social fund to finance e.g. various forms of leisure such as, cultural and educational activities, sports and recreation, providing material assistance (financial or non-financial), as well as granting housing loans. The annual social fund contribution for one full-time employee in 2011 amounts to PLN 1,093.93 (37.5% of the national average monthly salary in the second half of 2010). The above-mentioned annual contribution is the maximum amount for tax-deductibility purposes. An employer may also decide at his or her own discretion to reduce the annual contribution per employee or to wind down social funds, according to factual needs and the economic situation. The procedure for reduction or wind-down will depend on the company’s internal regulations. If you would like to analyse the effectiveness of your social expenditure or amend your internal regulations, please do not hesitate to contact: Agnieszka Janowska Director of Labour Law Department Tel.: +48 22 653 3862 Email: ajanowska Alicja Biernat Lawyer, Labour Law Department T: +48 22 653 3835 E: abiernat TGC Corporate Lawyers ul. Królewska 27 00-060 Warsaw, Poland T: +48 22 653 3644 F: +48 22 827 6915 E: tgc W: http://www.tgc.eu

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