Sofiya Law Firm has proved in court that salaried lawyers are not required to pay fixed social tax

A lawyer should not pay the fixed social tax unless they earn income from their activities as a self-employed person. No lawyer should be required to pay the fixed social tax if they work as a salaried employee.

This is what the Vinnytsia District Administrative Court held in case No. 120/1144/19. Sofiya Law Firm partner Ms Viktoriia Varienikova was responsible for the legal position in the case.

‘It is common knowledge that tax authorities classify lawyers as payers of the fixed social tax regardless of whether they have earned any income,’ the expert has explained. ‘According to the tax authorities, such taxpayers should determine an income tax base anyway. And even if the employer has already paid the fixed social tax for their salaried lawyer, the latter must pay the tax second time as a self-employed person. They assess total tax liabilities and prepare and send tax notices to those who do not pay the fixed social tax.’

Although the lawyer has been a self-employed person, she is officially employed and the company has regularly paid the fixed social tax. Having disagreed with the debt (tax arrears) notice, Ms Variennikova brought an action.

The court pointed out that no person should be required to pay the fixed social insurance tax unless they earn revenue from independent professional activity, including law practice. That said, a certificate of admission to the Bar only certifies that a lawyer is admitted to professional practice. However, it does not provide any basis or evidence to believe that a person earns income from law practice and is self-employed.

‘It should also be noted that registration with tax authorities does not provide a basis for payment of the fixed social tax either,’ Ms Varienikova has pointed out. ‘Both legal entities and self-employed persons are subject to registration with controlling authorities regardless of whether they have an obligation to pay any tax or charge.’

The court held that the earning of income from the abovementioned activities should be the key criterion for payment of the fixed social tax by a self-employed person. However, as a salaried employee, the advocate did not earn any. On these grounds, the court reached the conclusion that the debt notice should be dismissed.

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