Renata Kabas-Komorniczak

Tax adviser (Poland)
Branch manager
Phone: +48 22 696 28 00

Taxpayers (enterprises) provide a host of benefits to their employees as they carry on business. Despite the judgement of the Constitutional Tribunal of 8 July 2014 (file no. K 7/13), deciding whether a benefit should be classified as a gratuitous transfer to an employee taxable as income from employment is still a source of dispute with tax authorities. There are plenty of reasons why this judgement is often not implemented in practice. First of all, some opponents claim that the judgement only applies to benefits in kind while the nature of the expense reimbursement is monetary. Second of all, they claim that providing free-of-charge accommodation to an employee on a business trip or reimbursing him/her for costs of accommodation, despite not being obligated to do so by law, serves the interests of the employee because it helps the employee avoid an expense that would have to be incurred to fulfil his/her duties arising from the employment agreement (individual tax ruling no. DD3.8222.2.66.2016.IMD dated 21 June 2016).

The above-mentioned arguments did not hold in the Supreme Administrative Court which stated in its judgement of 9 August 2016 (file no. II FSK 1970/14) that costs of accommodation, the right workplace facilities, and organisation of an employee’s commute to a changing workplace location are incurred in the interest of the employer and it is the employer who gains a specific and measurable advantage in the form of job done properly and effectively by its employees. Therefore, notwithstanding the provisions of the Personal Income Tax Act which limit the exemption to per diems and other claims that an employee has in connection with a business trip, the said employment benefits cannot be classified as taxable. 

In overturning the challenged judgement, the Supreme Administrative Court indicated that classified as revenue of an employee may be only such benefits that the employee consented to and which were granted in his interest. Additionally, they must give the employee an advantage in form of an added asset or an avoided expense he/she would have had to incur, and the advantage is measurable and employee-specific (rather than generally available to all employees). The Court also held that the referenced judgement of the Constitutional Tribunal offered a pro-constitutional interpretation of the personal income tax provisions whereas such benefits should be classified on the basis of whose interest they serve. 

The Supreme Administrative Court has adopted a similar stance also in other judgements, for instance file nos.  II FSK 635/14 of 15 April 2016, II FSK 1689/13 of 23 July 2015, II FSK 2280/12 of 19 September 2014.

Hopefully, tax authorities will follow the Constitutional Tribunal's approach to the treatment of benefits paid to employees as this would help avoid a range of disputes, especially given the fact that benefits such as accommodation or organisation of an employee’s commute to and from the workplace are routinely provided in everyday life of taxpayers carrying on business also outside Poland and the implications of any change in the line of interpretation by tax authorities are burdensome both for taxpayers (enterprises) and for their employees.

If you are interested in more details about this issue, please contact our legal team. Rödl & Partner would be glad to assist you in this process and provide you with tax advice in Poland on CIT, PIT and VAT issues. Our tax advisers working in Rödl & Partner offices in Gdansk, Gliwice, Cracow, Poznan, Warsaw and Wroclaw will also answer other tax-related questions that you may have.