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Home Office and the obligation to submit a CIT-ST declaration

The COVID-19 pandemic has forced employers to change the organization of work in workplaces. Whenever possible, employees were assigned to work remotely. It was a huge logistical challenge, in which so far work was provided mainly stationary at the employer’s premises. The change in the way of working by employed persons influenced many issues in the field of labor law, for example, forced the government to deal with the issue of regulating remote work. The provisions in this area are currently being consulted within the Social Dialogue Council.

Remote work, however, raises many more questions for us. One of the problems that arises in relation to this topic is the obligation to submit a CIT-ST declaration to the tax office in the event that the employer has establishments (branches) in a local government unit other than the seat of the enterprise. In the case of remote work by employees, can we also talk about the obligation to submit CIT-ST declarations by entities that were not obliged to do so before the pandemic?

When is an entity obliged to submit a CIT-ST declaration to the Tax Office?

Such an obligation, in accordance with the Act (the Corporate Income Tax Act of February 15, 1992, Journal of Laws 2020.1406, i.e. of 18/08/2020; hereinafter: updop) imposes on entrepreneurs art. 28, which states that:

“Taxpayers with establishments (branches) located in the territory of a local government unit other than the one appropriate for their seat are obliged to submit to the tax office within the time limit for payment of monthly or quarterly advances and attach information prepared in accordance with separate regulations to the income (loss) tax return, in order to determine the income from the share of local government units in the income from corporate income tax.”

At this point, it would be worth considering what “an establishment (branch)” is within the meaning of the aforementioned Act. In this case, please refer to Art. 10 of the Act on Income of Local Government Units (Act of November 13, 2003 on Income of Local Government Units, Journal of Laws of 2003, No. 203, item 1966), where it is indicated that it is the place of work by the employee specified in the employment contract.

What information should be indicated in the CIT-ST declaration and by what date should it be submitted to the tax office?

CIT-ST declaration in accordance with the ordinance (Regulation of the Minister of Finance of 4 December 2007 on the settlement of income from the share of local government units in revenues from corporate income tax, Journal of Laws No. 230, item 1693; hereinafter: the Regulation CIT-ST) should contain the following information:

  • a list of establishments, with an indication of local government units in which these establishments are located;
  • the number of people employed under a contract of employment, providing work in individual plants:
  • on the last day of the month for which the tax is due
  • on the last day of the tax year for which the declaration on income (loss) achieved in a given tax year is submitted.

Does a change of job due to COVID-19 require submitting a CIT-ST declaration?

The regulations regarding remote work during the coronavirus pandemic are transitional regulations. This means that in the case of a remote work order for an employee, his place of work changes temporarily. However, this does not mean the necessity to change the main place of work indicated in the employment contract concluded with the employee. Therefore, in accordance with the interpretations of tax authorities, it is the workplace indicated in the employment contract that determines the obligation to submit a CIT-ST declaration or the lack of such obligation.

However, it is important to distinguish between the situation where the employee was assigned to perform temporary remote work in connection with the COVID-19 pandemic, and the situation where the employer concludes an employment contract with the employee, the purpose of which is to hire the employee remotely from the very beginning, i.e. in the light of the regulations in force in the field of teleworking. In this case, even if the employment contract generally indicates the employer’s seat as the place of work, often even including the address of a virtual office, it is not consistent with the facts. The definition of the place of work in the employment contract in this case is incorrect and should be corrected. In such a situation, the address of the actual performance of work should be indicated as the place of work, i.e. in the case of a home office – the employee’s residence address. In the above case, the employer will be required to submit CIT-ST information to the tax office.

How to determine the workplace of an employee whose workplace is indicated in the voivodeship or the entire country, e.g. in the case of sales representatives?

The interpretations of the tax authorities show that in the first place in the case of the so-called mobile workers, it should be determined where the work is most often performed. If we are not able to indicate a specific place of work, it should be assumed that the place of work of a given employee is the employer’s seat. In the CIT-ST declaration, you should then indicate the commune in which the employer’s seat is located. If, in the case of such an enterprise, there are no places of work other than the employer’s registered office for any of the employed employees, the workplace is not obliged to submit the CIT-ST information to the tax office.

However, it should be borne in mind that in the case of traders, who most often indicate their place of work in their employment contracts as territorially covering more than one commune, tax authorities and courts have so far presented divergent views. The tax authorities were of the opinion that it is necessary to investigate where the duties are most often performed. However, the Administrative Court in Szczecin in its judgment of February 26, 2015, file ref. I SA / Sz 1178/14) ruled that this position is inappropriate, as there are no grounds for assigning working time to a specific place of work. Therefore, the employee should not be assigned to a specific local government unit, but to the unit corresponding to the employer’s seat.