In many companies, employees who use company cars in the performance of their duties also use them free of charge for private purposes with the consent of the employer “after hours”. Providing this type of benefit results in the employee’s income in the form of a lump sum specified in the Act on the Personal Income Tax. For several years, there was a dispute between taxpayers and the tax authorities about the scope of benefits covered by this lump sum. It ended with a recent general interpretation issued by the Minister of Finance.
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Car lump sum for each employee
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The amount of the employee’s gratuitous benefit for the private use of a company car constitutes income, the amount of which has been determined by the legislator in amounts in Art. 12 sec. 2a of the Pdof Act (Journal of Laws of 2020, item 1426, as amended). It amounts to PLN 250 for cars with an engine capacity of up to 1,600 cm3, and for larger capacity – PLN 400. The type of car used (passenger car, truck) or the intensity of its use, measured e.g. by the number of kilometers traveled, does not affect the amount of revenue on this account.
The amount of the employee’s income on this account may be lower, however, if the employee uses the company car for private purposes only for part of the month. In such a case, the value of the benefit obtained by him is determined at 1/30 of the indicated amounts for each day of such use (Article 12 (2b) of the Personal Income Tax Act).
On the other hand, when the benefit due to the employee under the discussed title is partially remunerated, then the amount of the employee’s income is determined by the difference between the value of the monthly lump sum calculated in the above manner and the fee paid by the employee (Article 12 (2c) of the Personal Income Tax Act).
For many years, the issue of fuel for company cars made available to employees for private purposes was a contentious issue. The tax authorities have consistently argued that the value of the lump sum covers only the private use of the car.
On the other hand, the free benefit consisting in enabling the consumption of fuel purchased by the employer for private purposes is a separate benefit generating taxable income for the employee (cf. individual interpretation of the Director of the National Clearing House of March 24, 2020, No. 0112-KDIL2-1.4011.202.2020.2.DJ) ).
In this dispute, however, the courts adjudicated in favor of the employees, ruling that the lump-sum value includes the value of fuel and there is no need to establish a separate additional benefit for the employee on this account (cf. judgment of the Provincial Administrative Court in Wrocław of February 25, 2020, file ref.no. SA / Wr 796/19).
Ultimately, the Minister of Finance, influenced by the judicature of the courts, changed his position, which he expressed by issuing on September 11, 2020 a general interpretation, No. DD3.8201.1.2020. In this interpretation, he stated that the lump sum defined in Art. 12 sec. 2a of the Personal Income Tax Act, the value of the free benefit covers the costs incurred by the employer related to the maintenance and general use of the car, including fuel, but also, for example, insurance, tire replacement, ongoing repairs and periodic inspections that the company – as the car owner – must bear to keep the car operational and able to participate in traffic.
At the same time, the minister pointed out that such provision of a car sometimes involves additional costs, such as parking fees or tolls for tolls on the motorway. With regard to these expenses, he pointed out that they cannot be considered as benefits falling within the amount specified in Art. 12 sec. 2a of the Pdof Act In the analyzed provision, the legislator clearly indicated that it refers to benefits related to the use of a company car, and not all derived costs related to the travel by a car made available for private use.
For an employee, the income in question arises in the period in which he actually used the company vehicle for personal purposes (i.e. if he uses it, for example, in October, he will receive the income on the last day of October). The employer adds its value to the employee’s other income from the employment relationship for a given month and calculates and collects an advance on the income tax on their total amount. However, if the remuneration for a given month is paid in the next month, then the employer, by determining the income from the car lump sum on the last day of a given month, would not have what to collect the advance payment for the income tax.
In such a situation, it is justified to deduct the advance from the aforementioned income from the salary for a given month, paid in the next month (i.e. the advance payment for the October car lump sum should be deducted from the salary for that month and paid in November).
