Gifts from the Company Social Benefits Fund, taxation and contributions

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Due to low unemployment, employers strive for job candidates, offering them more and more benefits, including rich social package. As part of this package, employees often receive Christmas gifts. However, are the gifts from the Company Social Benefits Fund subject to taxation and contributions? Read on for the answer to that question.

What is the Company Social Benefits Fund?

ZFŚS, i.e. the Company Social Benefit Fund, is cash collected by the employer on a separate bank account. The purpose of a social fund is to provide social support to the employees entitled to it. Its main goal is to help people who are in a difficult financial situation.

The obligation to establish a Company Social Benefits Fund applies to:

  • all employers from budgetary and local government units;
  • other employers who, as of January 1 of a given year, employ at least 50 full-time equivalents.

What can be financed from the funds of the Company Social Benefits Fund?

The funds of the Company Social Benefits Fund come from write-offs, the amount of which is determined by the remuneration regulations or collective agreements. In the case of budgetary units, the amount of write-offs is specified in the Act on the Company Social Benefits Fund.

The Act on the Company Social Benefits Fund (ZFŚS) regulates what the funds from the social fund may be used for. Among them we can mention:

  • co-financing the employee's or his children's holidays,
  • cash allowance.
  • housing loan,
  • financing of nurseries and kindergartens,
  • co-financing of sports and recreational or cultural and educational services,
  • Christmas parcels.

Gifts from the Company Social Benefits Fund and taxation

Any packages, including holiday packages, received by the employee from the employer are benefits in kind. Pursuant to Art. 12 sec. 1 of the Act of 26 July 1991 on personal income tax (consolidated text, Journal of Laws of 2012, item 361, as amended, hereinafter: the PIT Act) monetary value of benefits in kind or their equivalents irrespective of the source of financing, these payments and benefits are income from the employment relationship, and therefore subject to taxation.

However, benefits financed from the Social Fund may be exempt from taxation provided that the following conditions are met:

  • the benefit is transferred to the employee,
  • has the nature of a cash or material benefit (excluding coupons, vouchers and other signs entitling them to be exchanged for services or goods),
  • the benefit is related to the financing of social activities,
  • the source of financing this benefit is entirely from the Social Fund or trade union funds, even in part the source of financing cannot be current assets (Article 21 (1) (67) of the PIT Act).

If all these conditions are met at the same time, the benefit is tax-free up to the amount not exceeding PLN 1,000 in the tax year. If this amount is exceeded, the benefit is taxable. If an employee is employed in several workplaces and receives such benefits from more than one, each employer may benefit from tax exemption. However, up to PLN 1,000 - this is the total amount of the exemption, no matter how many Funds the employee uses.

Gifts from the Company Social Benefits Fund and contributing

Benefits financed from the Social Fund for social purposes do not constitute the basis for the calculation of social security and health insurance contributions (§ 2 (1) (19) of the ordinance of the Minister of Labor and Social Policy of 18 December 1998 on detailed rules for determining the basis for the calculation of contributions for retirement and pension insurance. disability benefits). Regardless of the amount and form of the benefit granted from ZFŚS funds, these benefits are not subject to ZUS contributions In order for benefits financed from the social fund to be excluded from contributing, it is sufficient that they fall within the scope of social activity, and in accordance with the Act on the Social Fund, the scope of social activity includes, inter alia, material assistance - material and financial (Article 2 point 1 of the Act on the Company Social Benefits Fund - Journal of Laws of 2012, item 592, as amended).

Importantly, the amount of benefits granted by the employer from the Company Social Benefits Fund should depend on the employee's life, family and material situation (Article 8 (1) of the Act on the Company Social Benefits Fund).

Christmas gifts for all employees and ZUS

It is important that the employer, when determining the amount of the benefits granted, takes into account the life, family and material situation of employees, because providing benefits without assessing the degree of their situation cannot be made from the Social Fund. In such a situation, the employer, if he wants to provide employees with benefits, e.g. in the form of packages, should use working capital for this purpose. However, then the benefits will be subject to contributions.

Providing all employees with benefits from ZFŚS in the same amount, without assessing their situation, may be rejected by ZUS. The Social Insurance Institution may recognize these benefits as a contribution to the contributory wage. Read more about the Company Social Benefits Fund:
ZFŚS and income tax - new legal regulations
Benefits financed from the Company Social Benefits Fund - everything you need to know
Information on not establishing a Social Benefits Fund - free template

No Social Fund and Christmas gifts

Lack of the Company Social Benefits Fund does not prevent the employer from granting their employees Christmas packages. However, these benefits can then be financed only from the company's current assets, and therefore are subject to taxation and contributions. Start a free 30-day trial period with no strings attached!

Gifts from the Company Social Benefits Fund for retirees and pensioners

Gifts from the Company Social Benefits Fund may also be granted to pensioners who are former employees. In their case, different rules apply to the taxation and contribution of these benefits, namely:

  • tax-free benefits in cash and in kind, including vouchers;
  • benefits, in order to be tax-free, may be financed both from the Social Fund and current assets, as long as the amount of the benefits does not exceed PLN 2,280 in the tax year;
  • 10% flat-rate income tax is paid on benefits exceeding PLN 2,280 (Article 30 (1) (4) of the Personal Income Tax Act);
  • if the old-age or disability pensioner is a former employee (not in an employment relationship with the employer), the granted benefit is not contributory.

Gifts from the Company Social Benefits Fund for contractors

In the case of contractors, the service granted to them is taxable regardless of the means from which it is financed.

On the other hand, benefits for contractors are not subject to contributions, as long as the source of financing is funds from the Company Social Benefits Fund and provided that the required conditions are met, e.g. social criterion.

The source of financing for vouchers versus taxation and contributions

 

Source of funding

all funds from the Company Social Benefits Fund

the entire working capital of the company

partly funds from the Company Social Benefits Fund and partly working capital

Income tax

employee

Yes

Yes

Yes

mandatory

Yes

Yes

Yes

a pensioner who is a former employee

Nope

Nope

Nope

Social Security contributions

employee

Nope

Yes

value financed from the Social Fund - no, value financed from current assets - yes

mandatory

Nope

Yes

value financed from the Social Fund - no, value financed from current assets - yes

a pensioner who is a former employee

Nope

Nope

Nope

The source of financing for parcels and taxation and contributions

 

Source of funding

all funds from the Company Social Benefits Fund

the entire working capital of the company

partly funds from the Company Social Benefits Fund and partly working capital

Income tax

employee

no, up to PLN 380

Yes

Yes

mandatory

Yes

Yes

Yes

a pensioner who is a former employee

Nope

Nope

Nope

Social Security contributions

employee

Nope

Yes

value financed from the Social Fund - no, value financed from current assets - yes

mandatory

Nope

Yes

value financed from the Social Fund - no, value financed from current assets - yes

a pensioner who is a former employee

Nope

Nope

Nope

WFirma.pl system and ZFŚS payments

The Additions and Deductions option available in the wFirma.pl system allows you to enter remuneration components for people employed under an employment contract, and you can also settle payments from the Company Social Benefits Fund. Information on assistance from the Company Social Benefits Fund is entered in the PERSONNEL »EMPLOYEES» Employee details (by clicking on the employee's name and surname) »ADDITIONS AND DEDUCTIONS» ADD after selecting: "other ingredient".

 

You can set any parameters for this component of remuneration, i.e. decide whether they constitute the basis for taxation and contributions. Information about gifts from the Company Social Benefits Fund entered in this way will be included in the generated payroll.