Mobile workers – important and favorable reasonings of courts and tax authorities

Accommodation costs during business assignments

On January 9th this year, the Supreme Administrative Court (NSA) once again affirmed the previously presented stance, stating that providing accommodation to an assigned employee by the employer does not generate income on the employee’s side that would be subject to personal income tax (PIT).

In the analyzed case, the company offered its specialized services in the renovation and maintenance of production lines abroad, mainly within the European Union. This involved numerous travels by employees to locations far from their places of residence by several hundred or even several thousand kilometers. Consequently, the employer either provided free accommodation or covered the costs associated with their accommodation at a location and under conditions chosen by the company.

The dispute between the company and the Director of the National Fiscal Information and the Administrative Court primarily arose from whether providing employees with free accommodation related to assignments constitutes income taxable under personal income tax.

The Supreme Administrative Court’s ruling in favour of the company resulted from its filing of a cassation complaint against a previous judgment of the Administrative Court in Cracow, which agreed with the stance of the Director of the National Fiscal Information, asserting that providing accommodation to an employee is in their interest and, therefore, generates income on their side. Consequently, the employer is obliged to include it in the calculation of advance payment for personal income tax.

The NSA disagreed with this position and, drawing on guidelines established by the Constitutional Tribunal regarding non-remunerated benefits, concluded that providing accommodation to employees during assignments is in the employer’s interest. The employer gains a benefit in the form of contract fulfillment, which would not be possible without the assigned employees.

Equally important was the NSA’s reference to European law. The directive concerning the posting of workers to provide services specifies that reimbursements for expenses such as travel, meals, and accommodation are not included in the remuneration of these workers.

The position presented by the NSA is another, following similar judgments in August 2023, confirming that a consistent judicial line is being established on this matter.

Business travel of remote workers

In the case of another group of employees primarily working remotely, it is worth examining a recent individual interpretation issued by the Director of the National Fiscal Information. It was stated that the travel of such an employee to the office, if requested by the employer, should be considered as a business trip.

In the analyzed case, the limited liability company operated in the IT industry and employed workers residing in various regions of Poland who performed their duties remotely. The place of work specified in the contract was the province where the respective employee lived. Their presence in the office was sometimes necessary for the performance of their duties, and the company wanted to confirm its reasoning that, in such cases, it constitutes a business trip for these employees. The tax authorities had no objections.

A positive consequence for employers and employees of recognizing such a journey as a business trip is the possibility of exempting the costs of such travel from PIT based on Article 21(1), point 16, letter a) of the Personal Income Tax Act.

When availing of these exemptions, interested parties should, however, be mindful of the limits set by the Minister of Labor’s regulation of January 29, 2013 (i.e., Journal of Laws from 2023, item 2190).

Do these issues concern your organization? Do you need assistance in regulating remote work or in settling accounts for mobile employees? If so – do not hesitate to contact us!