The bailiff has paid outstanding wages or severance pay? Check how to settle social security contributions and tax.

There are frequent situations where an employee recovers unpaid salary and severance pay through enforcement proceedings by a bailiff. It is important to remember the obligation to withhold income tax advances and social security contributions in such cases. Following enforcement by the bailiff, the responsibility for settling various public-law levies lies with the employer, the bailiff, and the employee alike — regardless of the parties’ intentions or who actually controls the funds used to satisfy the claim. This article explains which parties are responsible for fulfilling these obligations and how to avoid problems with the tax office and the Social Insurance Institution (ZUS).

PIT-11 from the Bailiff – Income Tax

According to Article 42e(1) of the Personal Income Tax Act (PIT Act), “where payments of benefits specified in Article 12 are made by a court bailiff (…), rather than the employer, the bailiff is obliged, as a payer, to withhold an advance income tax payment, applying the lowest tax rate specified in the tax scale.” Pursuant to Article 42e(4) of the same Act, provisions defining the duties of payers apply accordingly. This means the court bailiff must transfer the amounts of withheld tax advances by the 20th day of the month following the month in which they were collected to the tax office account administered by the head of the tax office competent for the payer’s place of residence, while simultaneously submitting a PIT-4 declaration. By the end of February of the year following the tax year, the bailiff is obliged to provide the taxpayer and the tax office with PIT-11/8B information. If the withholding obligation ceases during the year, the bailiff must submit the information by the 15th day of the month following the month in which the last advance was collected.

The amount recovered from the employer as salary constitutes taxable income for the taxpayer at the time it is received, and pursuant to Article 45(1) of the PIT Act, the taxpayer must report this income in the annual tax return and tax the income together with other income earned in that tax year.

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Social Security Contributions

From the salary obtained by the employee as a result of bailiff enforcement, the employer is obliged to pay social security contributions on general terms (Article 4(2) in connection with Article 17(1) of the Social Insurance System Act). The employer is entitled to claim reimbursement from the employee for the part of the withheld social security contributions financed by the employee.

Arrears in Salary and Health Insurance Contributions

According to Article 84(2) in connection with Article 81(1) of the Act on Healthcare Services, the health insurance contribution must be paid by the former employee directly to the bank account indicated by the relevant regional branch of the National Health Fund (NFZ). Apart from reporting the income in the annual tax declaration, this is the sole obligation borne personally by the taxpayer.

In summary, when salary arrears are paid by a bailiff, the bailiff is responsible for withholding the appropriate advance income tax, the employer must pay social security contributions, and the taxpayer personally must pay only the health insurance contribution and declare the income in their annual tax return.

Severance Pay

According to the current position of ZUS, severance pay paid under the Act on special rules for terminating employment relationships for reasons not attributable to employees is not subject to social security contributions.

However, severance pay is not exempt from income tax. Similarly to salary, the taxpayer must declare the income from severance pay in the tax return and pay income tax on it, which is withheld by the court bailiff as the payer of the tax advances.