What is the liability for violating the deadlines for completing work under a contract?

What is a GPC agreement

The phrase “GPC agreement” stands for a civil agreement.
It is usually used as an alternative to an employment contract when it comes to hiring an individual to perform work or provide services without registering him as a member of the organization. In most cases, a GPC agreement is understood as a contract agreement (if an individual is entrusted with performing work that has a tangible result), or a contract for the provision of services for a fee (if an individual is entrusted with performing actions that do not have a tangible result). It is also possible to combine these types of contracts in one if the task involves both carrying out an activity and obtaining a specific result (clause 3 of Article 421 of the Civil Code of the Russian Federation).

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IMPORTANT. The parties to the GPC agreement are called not “employer” and “employee”, but “customer” and “contractor” - in a work contract, or “customer” and “contractor” - in a service agreement. This must be taken into account when drawing up the contract and related documentation (applications, acts, etc.). Also, in a civil contract there should be no mention of position, working hours, bonuses for holidays and other terms characterizing labor relations. Otherwise, such a contract may be reclassified as an employment contract. And this threatens the organization with a fine of up to 100,000 rubles. (Part 4 of Article 5.27 of the Code of Administrative Offenses of the Russian Federation) and additional tax charges.

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Sample contract agreement with staged payment for work

Let us note that the types of work included in individual stages, the timing of their production and the cost are indicated, as a rule, not in the text of the contract itself, but in a separate document that is an appendix to the contract. This document may be called a calendar plan, work schedule, etc.

Phased payment for work does not exclude the use of advance payments. Payment for work under the contract in this case is made in the following order:

• an advance payment is paid for the work of the 1st stage, as a rule, the same 20–30% of the cost of the work of the 1st stage;
• payment is made for the actually completed work of the 1st stage (i.e., the remaining 80–70%) and an advance payment is made for the 2nd stage, etc.

If the types of work included in one stage and their cost are fixed in the calendar plan, then the payment procedure itself is prescribed in the contract. Specific payment dates can be fixed in a separate document - payment schedule, etc.

What taxes does the “employer” pay under a GPC agreement?

When paying remuneration to a contractor or performer, it is necessary to accrue and withhold personal income tax (clauses 1-4 of Article 226 of the Tax Code of the Russian Federation). According to the application of an individual who has entered into a GPC agreement, he needs to be provided with standard tax deductions, including for children (clause 3 of Article 218 of the Tax Code of the Russian Federation).

REFERENCE. A freelance employee can receive property and social deductions only through the tax office (clause 8 of article 220, clause 2 of article 219 of the Tax Code of the Russian Federation).

The entire amount of remuneration accrued under a “civil” contract (i.e., the amount taking into account personal income tax) is included by the “employer” on OSNO as part of labor costs (clause 21, part 2, article 255 of the Tax Code of the Russian Federation). The specified amount is also taken into account when calculating the single tax within the framework of the simplified tax system (subclause 6, clause 1 and clause 2, article 346.16 of the Tax Code of the Russian Federation).

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Sample contract agreement with prepayment

Prepayment under a contract often amounts to 20–30% of the cost of work.

When choosing an option with an advance payment, the contract must indicate:

• prepayment amount;
• the moment when the advance payment must be made (for example, within 10 banking days from the date of signing the agreement);
• the amount of payment that is made upon completion of the work;
• the period within which the final payment is made (usually the specified period begins from the moment the work is accepted by signing the acceptance certificate for the work performed).

Payment of an advance payment may be subject to consideration from the contractor. For example, a government customer working within the framework of the Law “On the Contract System...” dated April 5, 2013 No. 44-FZ (hereinafter referred to as Law No. 44-FZ), with rare exceptions, is obliged to establish a requirement to ensure the execution of a government contract.

Moreover, the amount of such security cannot be less than the amount of the advance payment (see paragraphs 1, 2, 6 of Article 96 of Law No. 44-FZ). Such security can be made by depositing funds into the customer’s bank account or by submitting a bank guarantee (this or that method of security is chosen by the contractor, see paragraph 3 of Article 96 of Law No. 44-FZ).

Differences from taxation under an employment contract

Differences in the taxation procedure for payments under “civil” and employment contracts are related to the date of actual receipt of income.

When transferring payments under an employment contract, the following rule applies: if the employee does not quit, then income in the form of wages is considered to be actually received on the last day of each month (clause 2 of Article 223 of the Tax Code of the Russian Federation). On this day, the employer must calculate wages and calculate income tax, which must be withheld and transferred to the budget. Accordingly, when paying wages for the first half of the month, personal income tax is not calculated or withheld.

The situation is different with remuneration under a civil contract. In this case, the rule established for all other income in cash applies (subclause 1, clause 1, article 223 of the Tax Code of the Russian Federation). Such income is recognized as received on the day of payment or transfer. This means that personal income tax must be calculated and withheld under a “civil” contract for each payment. In this case, the type of payment (advance or final payment), as well as its date (beginning, middle or end of the month) does not matter.

ATTENTION. If the GPC agreement provides for the payment of an advance, then it may be necessary to adjust the personal income tax reporting for the period in which the advance payment was transferred. This can happen if the contractor returns the entire amount received or part of it due to the fact that he does not complete the work in full or on time (letter of the Ministry of Finance dated 08/28/14 No. 03-04-06/43135).

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Sample contract agreement with 100 percent prepayment

Full 100% advance payment in contractual obligations, unlike, for example, a supply agreement, is rarely used. This is due to the duration of the work: if the delivery time is calculated, as a rule, in days, then the production time is in months and even years.

It is more profitable for the customer to use a scheme with advance payment of individual stages of work. Therefore, full prepayment is used mainly for small, short-term work.

By virtue of Art. 719 of the Code, a contractor who has not received an advance payment may, if there are circumstances indicating that such payment will not be made:

• do not start work;
• suspend the work started;
• refuse to fulfill the contract and demand compensation for losses caused.

An example of a contract with full prepayment can be viewed at the link: Sample of a contract with 100 percent prepayment.

Insurance premiums for GPC in 2021

In terms of insurance premiums, a “civil” contract turns out to be more profitable than an employment contract. Moreover, according to two parameters at once.

Firstly, payments under the GPC agreement do not need to be charged insurance premiums in case of temporary disability and in connection with maternity (subclause 2, clause 3, article 422 of the Tax Code of the Russian Federation). This means that when using regular tariffs, the savings will be 2.9% (subclause 2, clause 2, article 425 of the Civil Code of the Russian Federation).

Secondly, as a general rule, payments under the GPC agreement do not need to be charged insurance premiums against industrial accidents and occupational diseases. Contractors and performers are recognized as insured persons only if this is expressly stated in the contract (Clause 1 of Article of the Federal Law of July 24, 1998 No. 125-FZ). If there is no such clause, then there is no need to transfer contributions “for injuries”. The amount of savings depends on the tariff established for the employer and can reach 8.5% (Article of the Federal Law of December 22, 2005 No. 179-FZ).

Pension and medical contributions in respect of remuneration under civil contracts are accrued in the same manner and in the same amounts as under employment contracts (clause 2 of Article 425 of the Tax Code of the Russian Federation).

ATTENTION. If an advance payment is provided for under a “civil” contract, insurance premiums must be calculated and paid during the period of accrual of the corresponding amount, and not after signing the act. This directly follows from the provisions of paragraph 1 of Article 421, paragraph 1 of Article 424, paragraphs 1 and 3 of Article 431 of the Tax Code of the Russian Federation. In this regard, we would not recommend following the explanations given in paragraph 2 of the letter of the Ministry of Finance dated July 21, 2017 No. 03-04-06/46733.

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Payment for actually completed work

Payment for actually completed work under a contract almost always occurs, with the exception of 100% prepayment. In any case, the contractor must deliver the result of the work, and the customer must accept it.

This is important to know: Order to extend a fixed-term employment contract: sample 2021

The process of delivery and acceptance of work is most fully regulated for construction contracts in Art. 753 Code:

• the contractor notifies the counterparty about the readiness of the work result / stage of work;
• the customer who received the notification is obliged to immediately begin acceptance;
• the customer organizes and carries out acceptance at his own expense, unless another rule is established in the contract;
• the customer may refuse acceptance if deficiencies are identified that prevent the use of the work result for the purposes specified in the contract, provided that the identified deficiencies cannot be eliminated by the parties to the contract;
• delivery of the work result by the contractor and its acceptance by the customer is formalized in a certificate (the rules for drawing up this document can be found by reading the article “Certificate of work performed under a contract - sample”).

In the event that one of the counterparties refuses to sign the acceptance certificate for the work performed, the second party signs the document individually. The invalidity of a unilateral act can be established in court if the reasons for refusal to sign the act are recognized as justified (clause 4 of Article 753 of the Code).

Payment for work performed is made within the terms established by the contract, which are counted from the day the act is signed.

Features of the GPC agreement and fines

When concluding a “civil” contract, several important nuances must be taken into account.

No labor discipline and personnel records

Persons working under a GPC agreement are not full-time employees and are not required to obey internal labor regulations. This means, in particular, that they do not have to come “to work” every day, or at a certain time. They can also finish performing work or providing a service at any time and go about their business. For such “workers” there are no lunch breaks, vacations or sick leave.

The organization, in turn, should not fill out a time sheet for freelance employees. Also, you should not draw up personnel documentation on them, including orders and work books. All this significantly reduces the non-productive burden on the “employer”.

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Payment of remuneration and fines

The freelance status of persons with whom GPC agreements have been concluded means that remuneration is paid to them not for their labor function, but for the fact of performing work or providing a service. Therefore, if the work or services are not performed in full, of poor quality or in violation of the deadline, the advance amount paid is subject to return.

The lack of the right of the performer (contractor) to a monthly salary also means that the customer does not have the obligation to transfer remuneration strictly every half month.

The fact that the relationship between a company and an individual is formalized by a GPC agreement makes it possible to have a flexible approach to the issues of establishing and paying appropriate remuneration. All these issues are resolved exclusively on a contractual basis. Therefore, various fines can be included in a civil contract if the work is completed in violation of the deadline or of poor quality.

For example, it is permissible to establish a condition on reducing remuneration for each day of delay in delivering the work. Or determine that the payment is reduced if the work is performed poorly. However, it is impossible to fine an “employee” under a GPC agreement for lateness, absenteeism and other labor violations. After all, as we have already said, the work regime does not apply to freelance employees. At the same time, a fine for untimely start of work or provision of a service, if the start date (time) is directly indicated in the contract, is quite legal (clause 1 of Article 708, Article 783, clause 1 of Article 330 of the Civil Code of the Russian Federation).

Termination of an agreement

When terminating a civil contract, the protective mechanisms provided for by the Labor Code do not apply. And the Civil Code allows the inclusion of any termination rules in a civil contract (subclause 2, clause 2, article 450 of the Civil Code of the Russian Federation). Moreover, the possibility of unilateral refusal to fulfill a contract for the provision of services at any time and without explanation is directly stated in Article 782 of the Civil Code of the Russian Federation. Therefore, there are usually no problems with “dismissal” under a GPC agreement.

IMPORTANT. These rules apply in both directions. This, in particular, means that the “employee” can refuse further cooperation at any time without notifying the customer two weeks in advance. True, in this case, it will be possible to deduct losses incurred due to the early termination of the contract from the amount of remuneration (clause 2 of Article 782 of the Civil Code of the Russian Federation).

In conclusion, we note that any contract or service agreement that an organization has concluded with a non-entrepreneur individual may come under the close attention of regulatory authorities. If inspectors find signs of an employment contract, this will result in a fine and arrears for insurance premiums for the “employer”. To prevent this from happening, you need to correctly draw up the GPC agreement in 2021 and not include unacceptable conditions in it.

Sample invoice for payment of work

Along with the certificate of completed work, the contractor, in order to receive payment under the contract by bank transfer, must send an invoice to the customer. Its form is not in the albums of unified forms, therefore, when compiling it, you must be guided by the provisions of paragraph 2 of Art. 9 of the Law “On Accounting” dated December 6, 2011 No. 402-FZ.

Thus, the invoice for payment of work must contain:

• document title (“Invoice”);
• the date of its preparation;
• name and address of the contractor;
• his bank details;
• customer name;
• a list of work performed and its cost, as well as details of the contract;
• signature of the contractor’s chief accountant or other authorized person;
• signature of the contractor's director.

Personal income tax

The remuneration that is paid on the basis of any agreement is the direct income of the citizen. And the law establishes that any income received must be subject to personal income tax. The rules for determining tax, depending on whether a person is an individual or a legal entity, differ.

If tax needs to be withdrawn from an individual, then the procedure falls entirely on the tax agent, which is the organization or person paying the remuneration. If the tax agent does not fulfill his mandatory conditions for paying the tax to the state treasury, he will be held responsible for this.

If the tax is levied on a legal entity or entrepreneur, then the payer is not a tax agent. That is, the tax is paid by the contractor himself based on the taxation system used.

If an entrepreneur uses a standard taxation system, then personal income tax is paid by him independently, as specified in Article No. 227 of the Tax Code of the Russian Federation. If an entrepreneur uses special tax regimes, then payment of personal income tax will not be required on the income received as a result of entrepreneurial activity. Taxes are collected in accordance with the current special regime, which exempts you from paying personal income tax.

When drawing up an agreement with an individual entrepreneur, it is necessary to indicate the details of the individual entrepreneur’s certificate. A copy of the certificate is a mandatory document attached to the drawn up agreement. This will eliminate questions about the lack of payments to the tax office.