--- title: When do service contracts qualify as management board member contracts and employment contracts? date: 2015-10-13T13:38:37Z modified: 2018-05-18T12:03:05Z permalink: "https://grow.ee/millal-teenuse-lepingud-kvalifitseeruvad-juhatuse-liikema-pleikteteks-ja-toopleikteteks/" type: post status: publish excerpt: "" wpid: 3761 timestamp: 2018-05-18T12:03:05Z tags: - Taxes - accounting service --- _**What to look for when classifying service contracts as employment and management board member contracts:**_ - companies that have provided services issue invoices to the recipient of the service every month and generally in the same amount; - companies provide the service only or mostly to one recipient of the service during a certain period of time; - the service provided to the recipient of the service by the members of its management board on behalf of the companies is the advice of the recipient of the service in the tasks they perform as members of the management board; - service provision contracts have characteristics typical of employment contracts. The Supreme Court agreed in its decision (RKHK 3-3-1-12-15) that the aforementioned circumstances allow for the conclusion that the actual content of the transaction was the employment and management board member relationships between the company and natural persons. _**When is the provision of services through a company justified:**_ - if a separate holding company has been established to manage a group of companies, the duties of whose employees include managing or advising the members of the group; - if the members of the management board or supervisory board do not work in the managed company on a daily basis and the expenses and work equipment necessary to perform their duties are covered by the company providing the service; - if a member of the management body is appointed for a short period of time or provides management services to many companies (especially in the case of bodies replacing the management board, such as a liquidator or bankruptcy trustee). Based on these circumstances, the actual content of the transaction is the provision of management or consulting services through the company. _**Please note**_ that when reclassifying a service contract into an employment and management board member contract, all taxes paid by the payer are added to the payments made. _**Therefore, the payments are considered net income, to which approx. 60-70% in labor taxes are added.**_ Of course, you cannot avoid paying late payment interest. Read more [here.](http://www.emta.ee/index.php?id=37591) _Proverb: The chest of a brave wolf is fat, so take it from where you can._