Using a company car for private purposes - new interpretations

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Legislative changes, which came into force on 1 January 2015, were aimed at making it easier to determine the tax income of employees for using a company car for private purposes and at eliminating the tax risk that was associated with the previous legal status. However, with the new regulations, new doubts and uncertainties arose. The following article will present the main problematic issues in this regard.

Using a company car for private purposes - legal regulation from January 1, 2015.

The regulations in force from January 1, 2015 introduced a definition of the valuation of cash benefits, adding Art. 12 sec. 2a and 2b, stating that the value of the gratuitous benefit due to the employee for the use of a company car for private purposes shall be determined in the amount of:

  • PLN 250 per month - for cars with an engine capacity of up to 1600 cm3,

  • PLN 400 per month - for cars with an engine capacity of more than 1600 cm3.

If a company car is used for private purposes for part of the month, the value of the benefit is determined for each day of private use of the car in the amount of 1/30 of the amounts specified above.

Should this income be contributed and taxed?

The answer to this question is unequivocal - the income that an employee receives in connection with the use of a company car for private purposes should be taxed and contributed.

When are the contributions exempted?

The answer to this question should be found in par. 2 points 26 of the Contribution Regulation, which provides for the possibility of exemption from social contributions, if the employer provides the car to the employee, even for a symbolic zloty or free of charge. However, this right must be derived from payroll regulations, collective agreements or other remuneration regulations. At this point, it is necessary to signal and pay attention to the position of ZUS in this matter. This institution does not agree with this type of exemption, which was confirmed by the decision of the Social Insurance Institution, branch in Gdańsk, No. 431 of November 20, 2014, No. DI / 100000/1320/2014. In order not to risk any penalties, it is recommended to apply to the Social Insurance Institution (ZUS) for individual interpretation in each disputed case.

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Should the fuel used by the employee for private purposes be taxed?

The position of the tax authorities

So far, there have been several individual interpretations in this matter. One of the first interpretations in this matter - the individual interpretation of the Director of the Tax Chamber in Warsaw of April 20, 2015 (IPPB2 / 4511-82 / 15-2 / AS) - stipulated that the lump sum amount of PLN 250 or PLN 400 covers only income from use of a company car by an employee for private purposes. This amount does not include the cost of fuel, washer fluids, etc., if these expenses are paid by the employer for the employee.

According to this position, it follows that the employer, covering the employee with the costs of fuel used for private purposes, would have to each time determine the amount of fuel remaining in the tank of the vehicle at the time the employee starts private driving and at the end of private driving and using the car again for purposes. business. Such action seems absurd and significantly burdening the employer, which is contrary to the idea of ​​facilitating the determination of the value of the gratuitous benefit for the employee.

Experts in support of the above-mentioned tax interpretation emphasized that the tax regulations stipulated that the monetary value of free benefits due to an employee for the use of a company car is the lump sum, which covers only the employer's costs resulting from making a company car available free of charge for private purposes. Therefore, if the employer decides to additionally cover the employee's expenses, e.g. for fuel used for purposes other than business purposes, then the value of this fuel will constitute the employee's tax-free income from the employment relationship, the amount of which should be determined on the basis of the amounts referred to in above. The value of this fuel should be taxed and taxed.

According to the tax authorities, the lump sum covers only the use of the car and the costs and fixed fees related to the use of the car, which the employer is obliged to pay regardless of whether the employee uses the company car for private purposes or not. The lump sum includes:

  • registration fee,

  • fee for compulsory inspections,

  • car insurance premiums,

  • car fleet service costs,

  • costs of repairs and services.

According to the tax authorities, the lump sum does not include fuel costs.

Such a position was taken, among others, by Director of the Tax Chamber in Katowice in the individual ruling of October 20, 2015 (IBPB-2-2 / 4511-501 / 15 / ZuK).

The content of the standard contained in art. 12 sec. 2a of the pdof covers only the provision of a car for private purposes. This lump sum applies only to charges related to the use of the car, regardless of whether the employee uses the car for business purposes or not.

The position of the courts

The breakthrough in the case at hand was the judgment of the Provincial Administrative Court in Wrocław of 23 November 2015. The court stated that the lump sum covers all benefits arising from the use of a company car for private purposes, including fuel costs (I SA / Wr 1595/15) . The argument for this is the opinion of the court, inter alia, dependence of the lump sum on the engine capacity. The benefit of the employer is not just the provision of the car, it is the provision of proper use, and thus also the costs necessary for such use, because the car cannot be used without fuel. Therefore, it should be assumed that a rational legislator, while linking the value of the lump sum with fuel consumption, wanted to exclude fuel expenditure from it at the same time.

Since the intention of the project initiator was to simplify the rules for determining the value of the benefit, he wanted to cover all its elements with a lump sum. Covering the lump sum only for the provision of a car or possibly fixed costs related to its operation with the need for a separate - as it rightly indicates - complicated determination of fuel consumption costs would not achieve the complex goal. Rather, it would make it further complicated to keep the necessary records.

The next judgment of the Provincial Administrative Court in Opole emphasizes the importance of the concept of "using a company car for private purposes", which means "use", "use", i.e. it is not the same provision of a car, but ensuring the proper use, i.e. incurring expenses enabling such use, including fuel.

It is necessary to observe the jurisprudence of administrative courts and the directions of individual tax interpretations in 2017 - whether the judgments already issued will be the beginning of a new interpretation of the provision on what is included in the lump sum amount. The approach of administrative courts gives hope to eliminate tax risk for both employers and employees.