What kind of birthday’s gifts shall you give to employees? Certainly, there are a lot of ideas. But, if everyone will be equally considered by the Tax Office (US) and Social Security (ZUS) ?
The definition of income from the article 12 par. 1 of Personal Income Tax Act is a key to the discussion. According to this: “all cash payments and monetary value of benefits in kind or cash equivalents (...), as well as the value of other gratuitous benefits or benefits partially paid” are considered as the income from employment relationship”.
A question is, what is the gratuitous benefit? Law regulations don’t clarify this issue so that the polish language dictionary can be helpful. And so:
• Benefit – “obligation to perform or provide something for someone's benefit" or "something which is carried or transmitted in respect of such liabilities”;
• Gratuitous – „not required payment”.
Now, there is no doubt that a birthday gift in the form of a pen, chocolates, cosmetics etc. is a benefit, in addition free of charge, and therefore its value should be added to the employee's income from which you should pay personal income tax and social security contributions.
But what if an employee receives flowers? Can flowers called as a benefit? Certainly it is provided something for someone, but if for anyone's profit? Rather no. “Someone's benefit” means that the employee has some profit, gain from it. Flower, although beautiful, has only a symbolic meaning. It can raise a smile on employee’s face, but it doesn’t bring him any financial profits. What is more, it is not a durable property increment. It means that it is not the income for a recipient. So, a gift in the form of a single flower or bouquet is therefore exempt from personal income tax and social security contributions. This statement was confirmed by Tax Office in Warsaw, in the individual interpretation from 30.09.2008, no. IPPB1/415-855/08-2/AM.
Katarzyna Hardek
The definition of income from the article 12 par. 1 of Personal Income Tax Act is a key to the discussion. According to this: “all cash payments and monetary value of benefits in kind or cash equivalents (...), as well as the value of other gratuitous benefits or benefits partially paid” are considered as the income from employment relationship”.
A question is, what is the gratuitous benefit? Law regulations don’t clarify this issue so that the polish language dictionary can be helpful. And so:
• Benefit – “obligation to perform or provide something for someone's benefit" or "something which is carried or transmitted in respect of such liabilities”;
• Gratuitous – „not required payment”.
Now, there is no doubt that a birthday gift in the form of a pen, chocolates, cosmetics etc. is a benefit, in addition free of charge, and therefore its value should be added to the employee's income from which you should pay personal income tax and social security contributions.
But what if an employee receives flowers? Can flowers called as a benefit? Certainly it is provided something for someone, but if for anyone's profit? Rather no. “Someone's benefit” means that the employee has some profit, gain from it. Flower, although beautiful, has only a symbolic meaning. It can raise a smile on employee’s face, but it doesn’t bring him any financial profits. What is more, it is not a durable property increment. It means that it is not the income for a recipient. So, a gift in the form of a single flower or bouquet is therefore exempt from personal income tax and social security contributions. This statement was confirmed by Tax Office in Warsaw, in the individual interpretation from 30.09.2008, no. IPPB1/415-855/08-2/AM.
Katarzyna Hardek
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