Providing the apartment for employees and contractors free of charge


Entrepreneurs often provide accommodation for employees and contractors. As a rule, in such a situation, the recipient will receive income from free benefits. However, in some situations it may be exempt or not created at all. This article discusses issues in which a flat is made available for free.

Determining the income from the employment relationship

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 .

The phrase "in particular" used above means that the above-mentioned categories of revenues constitute an open catalog.

Thus, the income from the employment relationship is all kinds of payments and benefits, i.e. any form of financial gain (i.e. both pecuniary and non-pecuniary) originating from the employment relationship between the employee and the employer. Therefore, everything that the employee receives from his employer - unless it is specified in art. 21 sec. 1 of the PIT Act, income exempt from tax or income from which tax collection has been abandoned pursuant to the provisions of the Tax Ordinance, is subject to taxation from the source of income referred to in art. 12 sec. 1 of the PIT Act.

Thus, various types of pecuniary and non-pecuniary benefits received by employees constitute income from the employment relationship referred to in Art. 12 sec. 1 of the PIT Act. At the same time, the fact that they were paid to employees who are on maternity leave, parental leave or unpaid leave and do not receive any other income from the employer is irrelevant to their qualifications. This means that the employer - as a payer - is obliged to collect an advance on income tax in accordance with the principles set out in Art. 32 of the PIT Act.

Providing a flat for free and exempting income from this title

Bearing in mind the above, it should be stated that, as a rule, making a flat available to an employee free of charge will generate income. However, in the case of employees, it may be released in amounts. According to Art. 21 sec. 1 point 19 of the PIT Act, the value of benefits paid by the employer for the accommodation of employees in:

  1. employee hotels,

  2. private lodgings rented for collective accommodation - up to the amount not exceeding PLN 500 per month.

Importantly, in some situations, income will not be generated for employees at all. According to the judgment of the Constitutional Tribunal of 8 July 2014, ref. No. Act K 7/13, free benefits are only property contributions 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 an increase in assets or the avoidance of an expense that he would have had to incur, and this benefit is measurable and not attributable to an individual employee.

Thus, it should be recognized that when an employee is posted to work outside the company's premises, he does not gain any benefit from renting a flat. If it were not for the necessity of the employee to go to work resulting from the duties imposed on him by the employer, such an employee would not be interested in looking for accommodation in another town. Consequently, the employer would not provide such a benefit at all.

Thus, it should be considered that the employee's income will arise when the employer provides the employee with a flat as an additional benefit.

Example 1.

The employer could not find employees, so he hired an employee from another city to whom he rented an apartment. In such a situation, the employee will receive income from gratuitous benefits.

Example 2.

The employer sent employees to work abroad. He rented them an apartment. In such a situation, income for them will not arise at all, because they do not gain any benefit.

In such a situation, the amount of the free benefit should be determined according to the equivalent of the rent that would be payable in the event of concluding a rental agreement for this premises. This position is shared by the Head of the First Tax Office of Wielkopolska in Poznań in a letter of June 22, 2006, No. ZD / 406-22 / PIT / 06, in which we can read:

“(…) The subject of the benefit received by the employee is the right to use the flat (premises) free of charge (ie not related to the obligation to pay the rent). Therefore, in view of the above, the monetary value of this benefit should be determined, in the opinion of the tax authority, with the application of Art. 11 sec. 2a point 3 of the Personal Income Tax Act. As the Applicant pays the rent for the employee at the same time - the employer is not the owner of the apartment, but only rents it - it should be agreed with the Applicant's position that it is the amount of rent for the apartment that should be included in the employee's income (...) ”.

Contractors and free service

In the case of contractors, when the apartment is made available for free, they will receive income from free benefits. In their situation, it is not possible to take advantage of the exemption. The legislator, in the cited Art. 21 sec. 1 point 19 of the PIT Act excluded from taxation benefits for accommodation received by employees. On the other hand, an employee is a person who is in a business relationship, employment relationship, contract work or a cooperative employment relationship.