The Housing Code of the Russian Federation provides for the possibility of paying remuneration to the chairman and members of the board of the HOA. And if, for example, in the case of concluding an employment contract with the chairman of the HOA, the procedure for paying insurance premiums and personal income tax from the chairman’s salary does not raise any special questions, then in the absence of employment contracts, the relevance of such issues increases significantly.
In this article we will examine the issues of the size and frequency of payment of remuneration, the method of receiving it, the obligation to pay insurance premiums and personal income tax and the determination of the person obliged to make such payments (and the corresponding deductions). Additionally, we will discuss the issue of indexing pensions for members and chairmen of the HOA board who are pensioners, and also consider the issue of paying bonuses to the chairman and members of the HOA board.
Reward
Clause 11 of Part 2 of Article 145 of the Housing Code of the Russian Federation establishes that the competence of the general meeting of members of a homeowners’ association includes determining the amount of remuneration for members of the board of the partnership, including the chairman of the board of the partnership.
Making a decision on the payment of remuneration falls within the competence of the general meeting of HOA members, and not the general meeting of owners of the premises of an apartment building. At the same time, such a decision will be mandatory for all owners of apartment buildings, including those who are not members of the HOA.
Let us immediately note that if employment contracts are concluded between the HOA and the members and the chairman of the HOA board, in this case the HOA acts as the employer and pays the corresponding taxes and fees.
Thus, in its Letter dated April 9, 2021 No. 03-15-05/23294, the Russian Ministry of Finance comes to the conclusion that “the payment of remuneration to members of the HOA board is related to the performance of their labor functions. If the general meeting of HOA members makes a decision to pay remuneration to members of the HOA board, then in this case the HOA acts as the entity paying remuneration to the above persons. Thus, based on the provisions of paragraph 1 of Article 419 of the Tax Code, the HOA is the payer of insurance contributions for compulsory pension and compulsory health insurance and for compulsory social insurance in case of temporary disability and in connection with maternity from the amounts of remuneration made by it in favor of the members of the HOA board.” .
Legislative norms
One of the questions that concerns the participants of the partnership is whether the chairman of the HOA has the right to receive a salary. The Labor Code (LC RF), namely Article 56, will help you understand this issue, which determines the mandatory registration of an employee when he is hired by an employer, who assigns specific job responsibilities to the accepted unit.
Since any work requires remuneration, the question of whether the chairman of the HOA can receive a salary is resolved positively. Salaries are set according to the clauses of the signed agreement, along with the definition of working conditions and terms of reference.
- Responsibilities of the chairman of the HOA and his rights
The responsibilities of the HOA include carrying out actions aimed at maintaining comfortable living conditions, which requires the involvement of workers to perform certain repairs and maintenance of the house. The chairman of the board, concluding contracts with such performers, himself needs legal registration of his actions. Performing the functions of an employer for some, he himself needs to be hired. In relation to the residents of the house, he becomes the same worker.
If the employment parameters of hired performers are regulated by the head of the board, it becomes unclear who sets the salary of the HOA chairman, because a person cannot sign a contract with himself. Such legal difficulties contributed to the emergence of abuses on the part of chairmen who calculated their own salaries.
Such behavior is unlawful, and the procedure for calculating and processing earnings is established in accordance with the provisions of the Housing and Labor Code.
1The first thing to be determined is the form of payment to the head of the board. According to Art. 147 of the Housing Code of the Russian Federation, the chairman is part of the management apparatus of the HOA and is a member of the board. In turn, the board is elected at a meeting of owners from among the participants of the partnership. 2After choosing the composition of the board, the most competent and worthy representative is selected from among its members. He is trusted to make the most important decisions and to speak on behalf of homeowners before contractors, supervisory organizations and authorities.
Within the framework of Part 3.1 of Article 147, the right of a member of the board to combine labor activities in the same partnership is limited. Since the head is chosen from the board, a contradiction arises:
- Article 147 prohibits the employment of the chairman in the HOA.
- Clause 11 of Art. 145 it is allowed to assign remuneration to the head of the board.
The conclusion follows from two provisions of the legislation: it is impossible to formalize the payment of wages under an agreement with an employee, but the right to remuneration remains (for a certain range of actions).
Remuneration for members of the HOA management bodies and management agreement
Neither an employment nor a civil law contract can be concluded between the members and the chairman of the board of the HOA and the management organization (in the case of an agreement with the management organization), since the activities of such persons are carried out in the interests of the owners of the apartment building and when applying for a job or in other contractual relations with a conflict of interest arises between the managing organization.
If remuneration is collected and paid by the HOA, then this must be provided for in the HOA charter; if an agreement has been concluded between the HOA and the management organization, then the issue of paying remuneration to the members and the chairman of the board of the HOA must be provided for in the agreement (if the management organization will deal with accrual and settlements).
Clause 69 of the Rules for the provision of utility services to owners and users of premises in apartment buildings and residential buildings, approved by Decree of the Government of the Russian Federation of May 6, 2011 No. 354 (hereinafter referred to as Rules No. 354) defines a list of services to be indicated in the payment document (receipt), which does not include payment of remuneration to members and (or) the chairman of the HOA board. However, this list is not exhaustive, so, according to paragraphs. l clause 69 of Rules No. 354 establishes that payment documents also indicate other information that is subject to an agreement containing provisions on the provision of utility services to be included in payment documents.
As for the HOA, as we indicated earlier, it is necessary to provide for the possibility of paying remuneration in the HOA Charter, make a decision at the general meeting of the HOA members and include the amount received in the estimate. Thus, the Appeal Ruling of the Moscow City Court dated September 20, 2021 in case No. 33-35243/2017 determined that “the inclusion of the amount of remuneration for the chairman of the HOA board in the estimate does not contradict the norms of the current legislation.”
On a note
According to the cassation ruling of the RF Supreme Court No. 84-KA19-1, the chairman of the board of the HOA:
- Acts in its own interests and in the interests of other owners of premises in the house.
- Does not have an employer.
- Cannot receive wages for his work.
- He cannot work in the HOA under employment contracts, combining different positions according to the staffing table.
The chairman of the board, elected by its members, receives remuneration for his work. The amount of remuneration is approved at the general meeting of the HOA members, and then it is included in the draft estimate of income and expenses of the partnership.
If the chairman of the HOA also performs the functions of a clerk, accountant or other specialist for the partnership, then an increase in the remuneration of such an owner for work must be approved at the general meeting of HOA members.
Decision on payment of remuneration and bonuses
The Housing Code of the Russian Federation does not provide for other conditions for the appointment and payment of remuneration to members and the chairman of the board of the HOA, other than its size. At the same time, we believe that, by analogy with the payment of remuneration to members (chairman) of the house council, it is necessary to provide for the procedure and conditions for payment of remuneration, as well as the procedure for determining the amount of remuneration (clause 8.1 of Article 161.1 of the Housing Code of the Russian Federation).
When choosing the amount of remuneration, you must understand that taxes and fees required by law must be paid on the amount received, so it is better to indicate that taxes are included in the amount of remuneration, or the amount of remuneration is fixed and the stipulated amount of taxes is collected from the owners in addition to the amount of remuneration.
The Sverdlovsk Regional Court came to an interesting conclusion in its appeal ruling dated September 2, 2014 in case No. 33-11033/2014. Thus, “a monthly collection of remuneration for the services of the chairman and members of the board of the partnership (including taxes) was approved in the amount of 3.03 rubles. / sq. m, of which the fee for remuneration of the chairman and members of the board of the partnership is 2.28 rubles. / sq. m, taxes - 0.75 rubles. / sq. m". Based on the above circumstances, the court of first instance concluded that the amount of remuneration for members of the board of the partnership, including the chairman of the board, was not actually established by the contested decision of the general meeting of members of the partnership. The panel of judges recognizes this conclusion as correct, since the amount paid by the members of the partnership to pay remuneration to the chairman and members of the board of the partnership may vary, since this amount is determined based on the area of the premises owned by the members of the partnership in a residential apartment building and depends on both the number of members of the partnership and and from their conscientious payment of such a fee, therefore, it is not possible to establish the amount of remuneration for the members of the board of directors of the partnership. Under such circumstances, the court of first instance came to the rightful conclusion that there were grounds to satisfy the claims regarding the recognition of the said decision of the general meeting of members of the partnership as illegal and the prohibition of charging a monthly fee for the remuneration of the services of the chairman and members of the board of the partnership in the amount of 3.03 rubles. / sq. m.
In the above ruling, the court pointed out that it is not enough to establish the amount that is paid depending on the area; it is necessary to indicate the actual amount of the remuneration. For example, not 1 ruble per square meter, but 1 ruble per square meter for a total of 10,000 rubles. Let us note that this position is quite controversial and is only the opinion of one of the courts of the subject.
It is possible to provide for the payment of bonuses based on performance. In the appeal ruling of the St. Petersburg City Court dated November 17, 2021 in case No. 33-23794/2016, the court sided with the chairman of the HOA on the issue of payment of bonuses - thus, “from the minutes of the meeting on issue 8 it follows that the HOA board has been given powers to results of the chairman’s work, pay him a one-time remuneration in the amount of no more than <...> rubles per quarter.” It should be noted that bonuses, their size, frequency and reasons for payment must also be provided for by a decision of the general meeting.
Remuneration of the chairman of the HOA
How is it calculated and what factors influence the amount of remuneration for the chairman of the HOA:
- Type and volume of work performed.
- The deadline for completing this work is the time required to achieve the task.
- The amount of remuneration can be initially specified. This can be either a certain amount or an agreed percentage of the value of the entire contract.
- In order to receive remuneration for the amount of work performed, the chairman is obliged to provide a completed acceptance certificate for completed work for each type of work separately, drawn up in accordance with all the rules. Only this document can be considered a legal basis for calculating remuneration. There are also requirements for filling out this paper that must be followed. It is important that this type of work is actually performed properly.
- The chairman of the HOA can carry out the necessary work himself, for example, replacing a valve in the basement or installing a window in the entrance. This type of work is regulated by civil law and is not illegal. There was a volume of mandatory work that was ultimately completed, but by whom it does not matter.
- After fulfilling his obligations, the chairman of the HOA board will receive the amount agreed upon for each type of work.
- In practice, it often happens that in fact an HOA has been created on a house, but all management rights have been transferred to some management company. At the same time, the partnership reserves the right to lease common property and control over all financial documentation. The homeowners themselves decide how and what to spend all the additional funds raised.
Rights and obligations of the parties
In the case of interaction with the management company, the chairman is not required to constantly monitor everything that happens on a daily basis, but in the case of independently solving all problems that arise, he is required to be constantly at the workplace.
Pension indexation
Despite the fact that since 2021 the powers to administer insurance premiums have been transferred to the tax authorities, in the process of writing this article we sent a number of appeals to both the Ministry of Finance of Russia and the Pension Fund of Russia (previously it had powers regarding insurance premiums). There has not yet been a response from the Ministry of Finance, but clarifications have been received from the Branch of the Pension Fund for St. Petersburg and the Leningrad Region regarding the payment of insurance premiums.
In its letter (Letter of the OPFR in St. Petersburg and the Leningrad Region dated August 23, 2021 No. 19-02/29988 “On the payment of insurance contributions and indexation of pensions to members of the elected body of HOAs, housing cooperatives”), the Pension Fund indicated that “the election of a person to a certain elective position presupposes the performance of a certain labor function and, accordingly, persons occupying elective positions in non-profit cooperatives (partnerships) are considered to be carrying out labor activities, regardless of the fact of concluding an employment or civil contract with them.”
The Pension Fund also pointed out the obligation of policyholders (homeowners' associations, housing cooperatives) to provide information in the SZV-M form for persons holding elected positions, regardless of the fact of the existence of an employment or civil law contract concluded with them, as well as the frequency of payment of monetary remuneration to them.
To exempt HOAs and housing cooperatives from the obligation to provide information in the SZV-M form, it is necessary to submit to the Pension Fund of Russia the Charter of the HOA, housing cooperative, which states that the person holding an elected position carries out his activities on a voluntary basis, for which the payment of monetary remuneration is not provided .
This is an important circumstance, in particular for cases when a pensioner is elected to an elective position and the question of pension indexation arises. So, if the payment of remunerations, bonuses and other payments is not provided (and most likely a notification about this has been sent to the Pension Fund), insurance payments are not paid (since there is nothing) and indexation is carried out. Otherwise, regardless of the frequency of such payments (monthly or once a year), insurance premiums must be paid to the HOA, housing cooperative, and accordingly, pension indexation is not carried out for pensioners.
Can the chairman of the HOA work as an accountant at the same time?
On July 18, 2011, a law came into force in which an amendment was made stating that the head of an organization, such a position is the chairman of the HOA, does not have the right to combine his main activity with any other during the same working hours.
The Chairman may maintain financial records, but this will not be considered as holding a separate position . True, homeowners who are members of an HOA can increase the amount of remuneration for this amount of work performed.
conclusions
Thus, remunerations paid to members and chairmen of the board of HOAs under civil contracts for the performance of work and provision of services are subject to insurance contributions for compulsory pension and compulsory medical insurance and are not subject to insurance contributions for compulsory social insurance in case of temporary disability and in connection with motherhood (relevant if the relationship is not actually an employment relationship and cannot be recognized as such. Read our article about concluding an employment contract and recognizing the relationship as an employment relationship).
In the case of concluding an employment contract, or the existence of actually established labor relations, remuneration paid to members and chairmen of the board of the HOA, remuneration is subject to mandatory insurance contributions for compulsory pension and compulsory health insurance and compulsory social insurance in case of temporary disability and in connection with maternity.
As we see, the types of insurance premiums differ depending on the presence of labor or civil law relations. Personal income tax is payable in any case of receipt of income. At the same time, if payments are made by a management organization, HOA, housing cooperative, then it must withhold the amount of insurance premiums and personal income tax and pay them to the appropriate budget.
Letter of the Ministry of Finance of Russia dated 04/09/2018 No. 03-15-05/23294 > > >
Appeal ruling of the Moscow City Court dated September 20, 2017 in case No. 33-35243/2017 > > >
Appeal ruling of the Sverdlovsk Regional Court dated 09/02/2014 in case No. 33-11033/2014 > > >
Appeal ruling of the St. Petersburg City Court dated November 17, 2016 in case No. 33-23794/2016 > > >
Letter of the OPFRF for St. Petersburg and the Leningrad region dated August 23, 2018 No. 19-02/29988 > > >
Author: Otrutskaya T.V.
taxes 34homeowners' association 67
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What does the salary of the HOA chairman consist of, how to arrange it correctly
How to apply for a reward:
- Invite the residents of the house to a meeting (usually convened once a month). To do this, residents are given invitations that indicate the date and time of the general meeting. The presence of at least 50% of residents is required (without this, resolutions approved at the meeting will be considered illegal);
- Members of the board familiarize residents with the certificates of work performed to improve the house and surrounding area, and also indicate the cost of this work;
- It is necessary to calculate the percentage of the cost of the estimate, which will be equal to the amount of remuneration (the percentage cannot be less than 3). The results of calculations are put to a vote (open or secret);
- When the participants in the process come to a consensus regarding the amount of material remuneration, a protocol is drawn up. In it, the chairman is given the go-ahead to withdraw the calculated amount of money. This document is the basis for the chairman of the HOA to receive remuneration.
- After this, it is conditionally accepted that the manager’s remuneration has been paid. Next, the chairman is obliged to submit a protocol to the tax authority with an application for receipt of remuneration and withdraw funds from the account.
From this list it is very clear what the salary of the chairman of the HOA consists of in reality.
Registration of reward
How to arrange it correctly? Payment is made in stages:
- To begin with, the manager must perform any work on the management or improvement of the house, and draw up a report of the work performed . This act should reflect how much time was spent on implementation, what results were achieved, a report on the expenditure of funds, as well as its direct role.
- Next, the act is presented to the board members for consideration .
- Having studied the certificate of work done, in accordance with the charter, the percentage of money spent on improvement is calculated , in which payment will be measured.
- The board member or meeting participants must agree with the amount received. Otherwise, the results of the work completion report will be revised.
- If consent is received, then a decision is drawn up - a protocol in which the head of the board is allowed to withdraw a certain amount of money from the current account of the partnership as payment for labor. It is with this piece of paper that the manager must come either to the bank or to the regional operator (depending on where your partnership account is located) and receive the money.
Also, if the board, for some reason, cannot meet, this act is provided by the owner of the property, who meet in the form of a general building meeting.
