We use cookies to personalise the website and offer you the greatest added value. They are, among other purposes, used to analyse visitor usage in order to improve the website for you. By using this website, you agree to their use. Further information can be found in our data privacy statement.

Employee benefits are still a bone of contention


Taxpayers grant various non-salary benefits to their employees (e.g. accommodation, commuting allowance) as part of their business operations. The question of whether these are free-of-charge benefits taxable as income from employment still remains a bone of contention with tax authorities.

Accommodation and commuting

This issue is controversial despite the judgment of the Constitutional Tribunal of 8 July 2014 (file no. K 7/13), according to which only those benefits may be classified as income which are granted with the employee’s consent (the employee enjoys them voluntarily), are in the employee’s interest and give the employee an advantage (e.g. in the form of an added asset or an avoided expense) which is measurable and specific to that employee.

There are plenty of reasons why this judgment is often not implemented in practice. First of all, some opponents claim that the judgment only applies to benefits in kind while expense reimbursement is of monetary nature. Second of all, they claim that providing free-of-charge accommodation to an employee on a business trip (or granting him commuting allowance) or reimbursing the employee 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 he would have to incur to fulfil his duties arising from the employment agreement. In the opinion of tax authorities, the above-mentioned benefits are granted free of charge and thus represent the employee’s income subject to personal income tax (e.g. advance tax rulings of the Director of the National Tax Information Service of 8 March 2018 and of 26 September 2017 (file no. 0114-KDIP3-3.4011.299.2017.2.PP), advance tax ruling of the Director of the Tax Chamber in Warsaw of 28 February 2017).

The aforementioned arguments of tax authorities diverge from the standpoint taken by the Supreme dministrative Court. For instance, the Supreme Administrative Court stated in its judgment of 9 August 2016 (file no. II FSK 1970/14) that costs of accommodation, welfare facilities appropriate to the work performed, 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 judgment, the Supreme Administrative Court indicated that classified as income from employment may be only such benefits which the employee consented to, which were granted in his interest and which gave the employee an advantage in the form of an added asset or an avoided expense he 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 judgment 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 aforementioned standpoint of the SAC on non-salary benefits granted to employees sent on business trips was shared by the Provincial Administrative Court in Gliwice (judgement of 11 January 2018, file no. I SA/Gl 957/17) and the Provincial Administrative Court in Warsaw (judgment of 17 October 2017, file no. III SA/Wa 2555/16 and of 18 October 2017, file no. III SA/Wa 3045/16).

Hopefully, not only administrative courts will more and more often rule on employee benefits in line with the judgment of the Constitutional Tribunal. but also tax authorities will join this line of rulings. 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.

Incentive schemes

The amendments to the Personal Income Tax Act effective since 1 January 2018 also include changes to the rules of taxation of income from employee incentive schemes based on shares or derivative instruments. Until 31 December 2017, income from incentive schemes was taxed at the PIT rate of 19% (applicable to capital gains). According to the new rule applicable since January 2018, income in the form of money disbursed under incentive schemes is classified to the source of earning that income. Thus, the employee’s income on this account is taxable according to the rules applicable to income from employment (i.e. at the tax rates of 18% and 32%).

The amendment also allows the deferral of income from the purchase of shares until their final disposal under certain specific incentive schemes and after fulfilling the conditions listed in the statute.

If you are interested in more details about this issue, please let us know. Rödl & Partner’s tax advisers in Cracow, Gdansk, Gliwice, Poznan, Warsaw and Wroclaw will be happy to answer any of your tax-related questions.


Contact Person Picture

Katarzyna Judkowiak

Tax adviser (Poland)


Send inquiry


Deutschland Weltweit Search Menu