Transport to work - is it the employee's income?
Employers often provide employees with free transport to work. This happens most often in situations where the company is located on the outskirts of the city or the place of work is in a city other than the company's headquarters. However, providing free delivery generates taxable income in some situations.
Transport to work and the employee's income
Pursuant to Art. 12 sec. 1 of the PIT Act, all types of cash payments and the monetary value of benefits in kind or their equivalents, regardless of the source of financing these payments and benefits, and in particular: basic remuneration , remuneration for overtime, various types of allowances, awards, equivalents for unused leave and all other amounts, regardless of whether their amount has been determined in advance, and in addition, cash benefits incurred for the employee, as well as the value of other unpaid benefits or partially paid benefits . It follows from this definition that an employee's income includes not only money received, but also received benefits in kind, with the exception of benefits specified in the catalog of exemptions contained in Art. 21 of the PIT Act.
It follows from this definition that the employee's income includes not only the received money, but also the received benefits in kind, with the exception of the benefits specified in the catalog of exemptions contained in Art. 21 of the PIT Act.
There are two situations in which the employer provides employees with free travel to work:
employees go to the company's headquarters and then are taken to the place of work,
transport takes place to the company's headquarters.
In the first case, there will be no income for employees from gratuitous benefits. This is confirmed by the judgment of the Constitutional Tribunal of 8 July 2014 (file reference number K 7/13). The Constitutional Tribunal found that free benefits are only property gains of individually defined value, received by the employee. Only then does the employee generate taxable income. In the opinion of the Tribunal, whether or not an employee has earned an income depends on whether he or she used the benefit offered by the employer entirely voluntarily and whether it was in his interest; if there were no benefits from the employer, the employee would have to incur the expenses himself.
Consequently, the Tribunal found that the employee's income can only be benefits which:
were met with the consent of the employee (he used them fully voluntarily);
were met in his interest (and not in the interest of the employer) and
have brought him an advantage in the form of increasing assets or avoiding an expense that he would have to incur, and this benefit is measurable and attributable to the individual employee (not generally available to everyone).
A similar position can be found in the judgment of the Provincial Administrative Court, Ref. No. act III SA 1150/02, which reads:
(...) The transport of employees to the places of work by the taxpayer by own transport, related to the performance of construction works carried out outside the employer's seat, constitutes the provision of services to the contracting authority. However, it does not constitute a free benefit for employees within the meaning of Art. 12 sec. 1 of the Personal Income Tax Act (...).
Transport of the employee to the company's headquarters
Pursuant to Art. 21 sec. 1 point 14a of the PIT Act, income tax-free is the value of the benefit received by the employee on account of the transport of employees by bus organized by the employer within the meaning of Art. 2 point 41 of the Road Traffic Act.
The above-mentioned provision of Art. 2 point 41 of the Road Traffic Act stipulates that the term "bus" used in the Act means a motor vehicle designed to carry more than 9 people, including the driver.
In a situation where the above conditions are not met, free benefits will be subject to taxation, but only if the employer is able to individually determine the value of the benefit he receives for each employee due to the free transport to and from the place of work organized for him, he is obliged to recognize the employee's side of income from the employment relationship. If there is no such possibility - no income is generated for the employee.
Such a position was confirmed by the Director of the Tax Chamber in Poznań in a letter of February 1, 2016, file ref. ILPB1 / 415-589 / 12/16-S / AP. We read that:
(…) The description of the facts and the future event presented in the application shows that the Company provides its employees with free transport to and from work. All employees of the Company can use such journeys, but the employee receives information about such a possibility upon taking up employment. Transport takes place by rented buses on the basis of contracts concluded with carriers, while the costs of transport services are borne by the Applicant on a monthly basis - the settlement of costs is based on the number of kilometers actually traveled by the carrier in a given month, multiplied by the transport rate per 1 km and the number of kilometers traveled. . Therefore, the number of employees using the transport does not affect the price of transport. Transport costs for employees are covered from the Company's current assets. Moreover, the Company does not keep records of which employees, when and on what route use the free shuttle service. Such records are not kept by any of the carriers.
Therefore, in the case at hand, it is not possible to individualize the value of the benefit received. In a situation where the employer bears the costs related to the travel of employees from and to the place of work, the cost does not depend on the number of employees who can benefit from the benefit, and it is not possible to determine which specific employees have benefited from this travel and to what extent, no it is the basis for determining the income on this account on the part of the employee (...).
Determining the value of the benefit
The monetary value of benefits in kind due to employees is determined according to the average prices applied to other recipients - if the subject of the benefit are goods or services falling within the scope of the employer's activity. The monetary value of other free benefits is determined:
if the subject of the service are services falling within the scope of the economic activity of the service provider - according to the prices applied to other recipients,
if the subject of the benefits are purchased services - according to the purchase price,
if the subject of the services is the provision of the premises or building - according to the equivalent of the rent that would be payable in the event of concluding a lease agreement for this premises or building,
in other cases - on the basis of market prices used in the provision of services or the provision of items or rights of the same type and species, taking into account in particular their condition and degree of wear and the time and place of making available.
If the benefits are partially remunerated, the taxpayer's income is the difference between the value of these benefits, determined according to the above-mentioned rules, and the fee paid by the taxpayer.
This means that in the case of employee transport services purchased by the employer - the monetary value of these benefits for tax purposes should be determined according to the purchase price.