How many employees can be hired by an individual patent holder?

At first glance, the answer to this question is simple. Federal Law № 155-FZ of 22.07.2008 "On Amendments to Part Two of the Russian Federation Tax Code", Article 346.25.1 of the RF Tax Code was amended by Paragraphs 2.1 and 2.2.

Paragraph 2.1 states that "an individual entrepreneur, a patent holder, can hire employees (under labor contracts among other employment contracts), the average number of which ... shall not exceed five persons within the tax reporting period".

Herewith, Paragraph 2.2 of the relevant Article stipulates that "if during the tax reporting period there was a breach of the requirements set forth in Paragraph 2.1 of this Article, such taxpayer is deprived of the right to apply the simplified taxation system based on the patent."

As can be seen from the comparison, Paragraph 2.1, allowing the use of employees, specifies a restricted number of five employees during the tax period, whereas paragraph 2.2 provides for patent revocation for violating a breach of requirement on the number of employees during the tax period. It is obvious that the wording "during the period of" is more severe, suggesting compliance with the number of employees on any day of the tax reporting period, whereas the wording "within the tax period" allows one to prevent the breach of the requirement within the complete tax reporting period, provided that the average number of employees does not exceed 5 persons.

We believe that since all existent doubts, contradictions and inconsistencies in the legal regulations on taxes and duties shall be interpreted in favor of the taxpayer in accordance with Paragraph 7 of Article 3 of the RF Tax Code, sincein this case, one should use the wording of Paragraph 2.1 of the Article under review.

If we look at Paragraph 2.1 more carefully, we can see that the average number of employees is defined in the manner prescribed by the federal executive body authorized in the field of statistics. This body is the Rosstat, which is authorized by the Order No. 278, dated 12.11.2008 the "Guidelines for completing the forms of federal statistical survey”, including the completion of the Form P-4 "Information on the number of employees, wages and turnover ".

In accordance with Paragraphs 84.3 and 85 of the Federal State Statistics Service Instructions, persons who worked part-time work under an employment contract or transferred with the written consent of the employee to work part-time, in determining the average number of employees are taken into account in proportion to the time worked.

An average number of free lances is assessed in accordance with the procedure of the average number of persons working part time.

Eleven employees of an individual entrepreneur were working part-time in September:
- eight employees were busy for two hours per day, each of them have made 22 working days. Those are accounted as 0.25 man/hour per working day (2/0 / 8 hours).
- three employees were working 4 hours within 11 working days. This is accounted as 0.5 man/hour (4 hours/8 hours) for each working day.

Average number of pat-time workers will amount to 2,75 man/hour (0,25 * 22 * 8 + 0.5 * 11 * 3) / 22 working days in September). This number is taken into account when estimating the average number of employees.

As one can see from the example, the usage the hourly rates (for example, in the provision of training services) and the work of part-time one can use the services of more than 5 people.

V.V. Antipov, Legal Advisor, "Legal Studies" Division