Polish employers are increasingly sending their employees to work abroad for periods ranging from a few weeks to several months, and sometimes for a year or more. Such secondments involve a number of additional obligations and issues to be addressed by both employer and employees. One of these is the issue of accommodating the seconded employee abroad by providing accommodation or premises available for the duration of the work there.
Over the years, tax authorities and administrative courts have taken different approaches to the manner in which employees are subject to personal income tax (PIT) and the taxation of employers’ accommodation expenses.
As we are constantly monitoring the solutions related to the topic of GMTS (Global Mobility Tax Services), in this article we would like to draw your attention to the judgment of the Voivodeship Administrative Court (VAC) in Wrocław of 21st November 2024, ref. I SA/Wr 534/24.
In this judgment, the Court unequivocally indicated that benefits for employees sent to work outside the territory of the Republic of Poland in the form of providing accommodation in another EU country cannot be considered as any element of remuneration, both within the meaning of the provisions of the labour law and, consequently, of Article 12(1) of the PIT Act. This is because they do not constitute gratuitous benefits, as they are charged entirely to the employer and are incurred in the interest of the employer.
The subject of the complaint was a tax ruling of the Director of National Tax Information (Director of NTI) dated 23th April 2024, mark: 0115-KDIT2.4011.159.2024.1.ENB concerning personal income tax.
In this ruling, the Director of NTI held that the value of the accommodation costs subsidised by the complainant constitutes income for employees from gratuitous benefits, which should be qualified to the source referred to in Article 12(1) of the PIT Act. At the same time, in accordance with Article 21(1)(19) of the PIT Act, the value of benefits incurred by the employer for accommodation of employees – up to an amount not exceeding PLN 500 per month – is free from income tax.
The VAC disagreed with this argumentation – citing Directive 2014/67/EU and the Act of 10th June 2016 on the posting of workers in the framework of the provision of services (Journal of Laws of 2021, item 1140, as amended) and Directive 96/71/EC, it held that the use by a posted employee of accommodation provided by the employer is a result of the way in which the work is organised by the employer, including the requirement to provide it abroad, far from the employee’s place of residence.
In addition, the VAC pointed out that Directive 96/71/EC, although not directly concerned with taxation issues, due to its impact on the definition of income from the employment relationship of employees posted to work in the provision of services abroad, also has an indirect effect on the determination of income from the employment relationship by eliminating from such income any benefits and reimbursed expenses for organising the employee’s stay outside the national territory.
Pursuant to Article 4(5) of the posting of workers Act, the part of the posting allowance which does not constitute reimbursement of expenses actually incurred in connection with the posting, such as travel, board and lodging expenses, shall be included in the wage. In the event that the law applicable to the employment relationship of the employee posted in the territory of the Republic of Poland does not specify the part of the posting allowance which constitutes reimbursement of the expenses actually incurred in connection with the posting, the entire allowance shall be deemed to be reimbursement of such expenses. The second sentence of this paragraph therefore introduces a presumption that any allowances to the posted worker’s remuneration which cannot be directly attributed to the nature of remuneration for the work performed are to be regarded as reimbursement of the worker’s expenses such as travel, board and lodging. However, they are not considered as remuneration for work. There are also no grounds to differentiate the legal situation of an employer posting an employee from the territory of the Republic of Poland in terms of the obligations imposed.
In addition, the VAC emphasised that it follows from the description of the facts that the seconded employee has no freedom in the management and disposition of the benefits provided by the employer, and uses them only for a specific purpose – the performance of his/her employment duties. As a result, the provision of accommodation services to seconded employees is solely in the interest of the employer sending the employee from the territory of Poland to another EU country, and not in the interest of the seconded employees.
Therefore, benefits in favour of employees seconded to work outside the territory of Poland in the form of providing accommodation in another EU country cannot be considered an element of remuneration, within the meaning of both labour law provisions and, consequently, Article 12(1) of the PIT Act – they are not constitute gratuitous benefits.
Although the administrative courts have recently uniformly ruled that benefits provided to employees posted to work outside Poland in the form of accommodation in another EU country cannot be considered as an element of remuneration, as they are entirely for the account and in the interest of the employer, it is worth analysing each situation separately. As part of our GMTS team, we invite you to contact us on this and many other issues relating to employee secondments from both employer and employee perspectives.
