Controversy related to the accounting of business travel. Part. 2 – correct calculation of diet height

This Article follows on from the subject on the correct calculation of the allowances due to staff for their business trips 1 . In the publication, particular attention was paid to the question of how the provision of some or all of the meals affects the amount of the diet and the tax settlement of the taxpayer.

In this respect, there are various controversial ideas from the representatives of the tax office. They are worth confronting with the provisions in force. In recent years, the position of the courts has also undergone some evolution in some matters related to the accounting of diets.

1. National journey continues equally 8 hours – Is the diet acceptable?

It is certainly worth addressing the question of the amount of diet due when the national journey takes place exactly 8 hours (and not a second longer). In everyday practice you can still often meet with two different positions: that the diet is not (already less and less) or that half of the diet is available.

Such a contradiction is the line between different positions in this area in the previous state of the law (despite similar wording).

For the record, according to content section 7 point 1-2 Regulation of the Minister of Labour and Social Policy 29 January 2013 on the claims owed to an employee employed in a state or local government budget entity for business travel (hereinafter: ‘rPS’ or ‘the Regulation on business travel’) 2 , The diet for domestic travel is intended to cover increased food costs and is 30 PLN per day of travel.

The allowance payable shall be calculated for the time from the start of the national journey (departure) until the return (on the journey) after the performance of the service task as follows:

1) if the journey is no longer than a day and is:

• (a) less than 8 hours – no diet,
• (b) from 8 to 12 hours – entitled 50% diet,
• (c) above 12 hours – is entitled to a full allowance;

1. if the journey lasts longer than a day, a full-height and incomplete-but started-a-day allowance shall be granted for each day:

(a) to 8 hours – entitled 50% diet,

(b) above 8 hours – you have a full diet.

According to the dictionary definition, the word “over” is a communication element, that there is more than the word to which it was added – the equivalent in mathematics will be the sign “>”.

It is therefore logical that the word ‘to’ (such as ‘count to’) five”) includes the given value (here: 12) and is the mathematical equivalent of ‘≥’. Therefore, it cannot be different from the recognition that the word ‘from’ is the equivalent of ‘≤’. A journey that lasts exactly 8 hours (no less) gives in principle the right to 50% diet.

However, what is the case when on a domestic journey from 8 and to 12 hours (≤8 hours-12 hours≥) Did the employee have partial board?

1. The national trip lasts from 8 to 12 hours and are partial meals provided – is diet appropriate?

As per content section 7 point 3) rPS diet is not available in two specific situations:

• 1) for the time of posting to the place of permanent or temporary residence of the worker and in the cases referred to Under section 10 Regulations, and
• 2) if the worker is provided with free full-day meals.

It is therefore clear that if a worker has received partial meals rather than full-day meals, the diet should continue to apply if the journey lasted at least 8 hours After all, the diet is intended to cover the increased food costs that the worker incurs due to travel to a place other than his/her place of residence (then the diet is not available). Content section 7 point 4) rPS amount of the diet in question Under section 1, is reduced by the cost of the free meals provided, assuming that each meal represents, respectively:

• 1) breakfast – 25% diet;
• 2) dinner – 50% diet;
• 3) dinner — 25% diet.

The legislator is not precise here. The provision states that ‘the amount of the allowance is reduced’, indicating that it is a diet calculated and payable to the worker.

If the intention of the legislator was that the amount of the allowance (calculated and payable to the employee) be reduced accordingly 7.5 PLN (breakfast), 15 PLN (lunch) and 7.5 PLN (dinner), should write this clearly, using numerical indications.

When the legislator used the phrase "25% diet’, 50% diet and at the same time predicted a situation of reducing the amount of diet to 50% the diet in question Under section 7 section 1, i.e. 15 PLN, If there is no full-day nutrition, the diet should be available.

This means that in this unique situation, when the journey continues from 8 and to 12 hours, the method of calculating the diet should not be based on ordinary arithmetic (calculation of the amount of the diet based on the number of hours and the reduced amount of the diet applied, respectively 7.5 and amounts 15 PLN – Such allowance is justified only for a full diet) and on the model:

F(X) = X – (25% v50% v75% * X),

where:

• – F(X) is a diet due to an employee,
• – X is the amount of the diet calculated on the basis of the duration of the journey,
• – alternative values 25%/50%/75% refer to the situation where partial food is provided (25% – breakfast or dinner, 50% dinner, 75% breakfast and lunch or dinner and dinner).

Example 1

Due to the duration of the journey (e.g. 11 hours and 45 minutes) the employee is entitled to 50% diet, or 15 PLN.

Due to the fact that a worker has been provided with lunch (the regulations do not provide that the employer must provide a meal, for example, a meal eaten at the premises of a counterparty (table) or at a business meeting) should be reduced by 50% (section 7 section 4 point 2 rPS).

Since the rule governing the reduction of the allowance for meals provided to the worker refers to the amount of the allowance in question Under section 7 section 1 Regulations 30 PLN, This could lead to the conclusion (mistaken in the author's opinion, because it does not include the content of other provisions) that regardless of what diet is available in a particular case, full or partial, the employee should be deducted accordingly: for breakfast and dinner 7.5 PLN (25% x 30 PLN), For dinner.

15 PLN (50% x 30 PLN). In this case: 15 PLN (50% to 30 PLN) – 15 PLN (lunch) = 0. A diet should not apply if all-day meals are provided. In this case, only dinner was provided.

Calculation of the diet according to the formula: 15 PLN – (50% to 15 PLN) = 7.5 PLN.

The diet is intended to cover the increased food costs, which on the journey going on in the following example are close 12 hours I'm sure the employee will have to carry it.

It should not be doubted, therefore, that if the worker is still not provided with all-day meals and is assured two meals (e.g. breakfast and lunch) should continue to be available. The diet calculation according to the formula should look as follows:

1. 00 PLN (50% of 30.00 PLN) – (25% + 50% of 15.00 PLN) = 15.00 PLN – 11.25 PLN = 3.75 PLN[3]

How do tax authorities express themselves on this subject? Sometimes the conclusions were absurd.

1. The national trip lasts from 8 to 12 hours and partial food – is there a negative diet?

In the interpretation of the Director of the Tax Chamber in Łódź from 25 July 2013 The Authority considered that ‘in the event of the occurrence of a so-called ‘negative leaf’ to which the return of the employee will not be called upon or returned in spite of the employer’s call, the employee will receive an income equal to the amount of that ‘negative leaf’ (!!!

– the Author). This amount will constitute the so-called ‘extra benefit’ to an employee who has its source in relation to employment, which fills the distribution of income from the employment relationship within the meaning of Article 12(1) the cited Act of 26 July 1991 on personal income tax 4 (Is that so? – an author).

The ‘negative die’ does not benefit from the tax exemption from Article 21(1)(16) point (a) u.p.d.o.f., because it exceeds the amount due to the employee under the abovementioned regulation on the claims owed to the employee employed in the state or local government budget entity for business travel.’

It wasn't prima aprilis. It turns out that when a worker is in a delegation and is provided with partial food, he receives income. Such an interpretation is in complete conflict with other chief principles/regulations that define the income of a natural person/employee.

Even without an interpretation of the provisions on the basis of which the amount of the diet referred to in the preceding point is calculated, it should be clear that a staff member who performs duties (equivalences) and who takes a business trip at the employer's direction receives no benefit under the circumstances described.

It should be added here that the potential analysis of the possibilities of applying the exemptions in question under Article 21 the Personal Income Tax Act should assume the rise of this revenue which the natural person has received (in order to avoid a proverbial situation of breaking open doors). Fiscals Not Once first misinterpreting a contrario despite the basic principles of income recognition 5 .

Exemption in question under Article 21(1)(16) the Personal Income Tax Act it is valid for allowances and charges and for reimbursement of expenses, and therefore applies to all those situations where certain amounts are paid to workers as:

(a) amounts due (e.g. diet or other lump sum) — donations with a specific financial dimension; or

(b) the reimbursement of expenses, i.e. where there is a transfer of funds which should not, for obvious reasons, constitute revenue, since this is the consequence of an earlier reduction in the employee's assets.

In the case described above, there is usually no income on the side of a natural person, which could later be applied Article 21(1)(16) the Personal Income Tax Act

For the record, according to the contents Article 11(1).

the Personal Income Tax Act the income of the natural person (subject to provisions which are not applicable in this case) is received or made available to the taxpayer in the calendar year of the money and cash value and the value of benefits received in kind and other unpaid benefits.

In the present situation (the ‘negative scheme’), the employee does not receive and is not at his disposal any money or cash value, no benefits in kind and no unpaid benefits. For tax purposes, free benefits shall mean all legal or economic events resulting in free of charge, i.e.

not related to costs or other forms of equivalent, attribution to the taxpayer’s assets, having a specific financial dimension 6 .

The concept of unpaid benefit under tax law covers all economic phenomena and legal events resulting in an advantage at the expense of another entity, or all legal events and economic events resulting in free of charge, that is not related to costs or other forms of equivalent, the provision of assets to that person with a specific financial dimension.

Further on this issue, not all benefits received by an employee from an employer constitute revenue which is taxable. The taxation of the benefit in question is determined by an objective assessment of whether the benefit in question was in the interests of the worker and whether it constitutes a real benefit to him.

As pointed out by the Constitutional Court 7 , the determination of whether the benefit actually saved expenditure by the worker requires an examination of whether the employee has benefited from the benefit offered by the employer voluntarily.

This means that if a worker has not made use of the benefit voluntarily, there will be no revenue on his side from the unpaid benefit. In the present case, the employee carries out a service instruction (no voluntary) when travelling on a business trip (an equivalent certificate of interest and for the benefit of the employer).

The definition of income from the employment relationship itself assumes that the income is the benefits incurred ‘for the worker’ (not ‘per employee’ in connection with the performance of his business orders) and the value of other unpaid benefits received by him. Under Article 12(1) of the Personal Income Tax Act, income from employment, service relationships, home-based work and cooperative employment includes all monetary payments and the monetary value of benefits in kind or their equivalents, regardless of the source of funding, in particular: base pay, overtime pay, allowances, bonuses, cash equivalents for unused leave and all other amounts, whether predetermined or not, as well as monetary benefits paid on behalf of the employee and the value of other free or partially paid benefits.

This case eventually became a matter of administrative court decisions.

In one of the WSA judgments in Warsaw 8 considers that ‘the legal event in question cannot be treated by a fiscal entity as the income of an employee on a business trip as the situation of a negative diet value does not constitute an unpaid benefit for him, dependent on his conscious acceptance of such a diet calculation’.

Thus, the court confirmed that workers on business trips for the occurrence of a confluence of dietary reductions (due to a shorter business trip and the provision of meals) and consequently the occurrence of a negative diet value (sic!

– o horror, court confirmed the existence of a so-called negative diet) would not receive an unpaid benefit for the employer. The Court of First Instance held that: section 7 section 4.

rPS amount of the diet in question Under section 7 section 1 RPS is reduced by the cost of free meals provided, assuming that each meal represents: breakfast – 25% diet, lunch – 50% diet, dinner – 25% diet. The above provisions concern a situation where deductions are made from the full diet due per day of travel.

The Court held that the grammatical interpretation of the above provisions indicates that the normator did not foresee the possibility of a negative diet.’ In another part of the justification, we read: “the fact that the normator has provided for such an opportunity to establish a negative result of the value of the diet must not in any way burden the recipients of these provisions”.

Is that what he predicted or not?

Therefore, if, in the judgment of the court, the legislator did not provide for a negative diet institution, at the same time indicating specific situations where the diet does not include: (a) a business trip going on below 8 hours, (b) the business trip to the place of permanent residence, (c) the business trip during which all-day meals were provided), it does not seem to have been fully understood that ‘the normator in the provision section 7 section 2 point 1 point (b) the diet regulation only indicates a situation in which, as a result of reductions, the diet will not benefit.

This provision confirms that a dietary charge if the business trip is less than a day does not occur if the two meals, such as breakfast and lunch.’

In the author's opinion, this thesis is not binding in the existing regulations. At the same time, it should be pointed out that this is at the same time a common practice by taxpayers in clearing the delegation in the situation described.

1. Daily meals – what if its cost is higher than the amount of the diet?

It is clear from the comments of the Staff Regulations that, in the case of domestic travel, a diet is not granted when a worker is provided with full-day meals (cf. section 7 section 3 point 2 rPS).

It is worth noting that the legislator used the phrase "provided" in this provision without indicating that it is situations where only the employer provides this food. The employee can attend a meeting organised by the contractor during which lunch is served.

This has the effect of reducing the diet or even excluding the payment of the diet (when other meals were provided, for example, by the employer). The rules do not define (and the damage) what is implied by the term "boarding all day". Commonly, all-day meals mean at least three meals per day.

Given that the diet is proportionally reduced when breakfast/dinner/dinner is provided, it should be considered that this is precisely the case. three types of meals.

The lack of precise regulation of the Regulation, while the lack of internal regulations (the business travel regulation) which may be considered as e.g. lunch, can in practice cause some disputes on the employer-employee line (it would be sufficient to indicate that this concept also includes, for example, lunch/ brunch, if it is a hot, full-value meal, and not considered to be a small snack or other light meal lunch).

The same tensions may also arise when the journey is (starting and ending) at times where it is difficult to imagine the need for individual meals (acting rationally and adopting a dictionary definition of the above-mentioned meals) and at the same time the worker is provided with meals at other times.

Example

The employee made a business trip from 3:00 to 15:30 (Travel time 12 hours 30 minutes). During the trip, the employee had breakfast and lunch provided. The duration of the journey does not include the time at which dinner is usually eaten. The lack of clear rules leads to the conclusion that, for example, an employee should be entitled to a allowance of 7.5 PLN.

In the light of the above, it seems appropriate to introduce the definition of all-day meals into the provisions of the Regulation (postulate de lege ferenda) (for example, ‘all-day meals’ means that the employer or other entity will be provided in the day-to-day business trip together. third meals: breakfast, dinner, dinner.

If a business trip starts or ends in hours not covering the time of the meal in question, all-day meals shall be understood to provide lunch and other meals on a given day. At the same time, meals are indicated, e.g. breakfast time ≤6-12>, lunch time ≤12-18>, dinner time ≤18-22≥).

In practice, a more important problem appears to be the situation where the employer provides the worker with all-day meals and his cost exceeds the amount of the allowance due. Should the employee then show tax revenue?

Example 1

Cost of individual meals: breakfast 7.5 PLN / Dinner 20 PLN / dinner 7.5 PLN = 35 PLN.

What if the total cost of meals (all-day meals) does not exceed the amount of the diet, but only the value of individual meals exceeds certain amounts? \

Example 2

Cost of individual meals: breakfast 10 PLN/ Dinner 10 PLN / dinner 10 PLN = 30 PLN.

What, in turn, if the employer bears part of the food costs and the remainder is provided by the party accepting the posted worker, as confirmed by the employee himself in the statement, or is a common practice used by the contractors on mutual visits?

Example 3

Cost of individual meals: breakfast 7.5 PLN / dinner amount unknown / dinner 10 PLN = 17.5 PLN.

What if the employer bears the cost of all-day meals and the cost (or hypothetically) does not exceed the amount of the diet? Is the employee entitled to compensation for this?

Example 4

Cost of individual meals: breakfast 5 PLN / Dinner 14 PLN / dinner 7.5 PLN = 26.5 PLN.

The rules do not provide for such casusistism. For all the above examples, the answer should be one. Regardless of the form in which a full day's feeding takes place, the diet is not available.

However, does the employee obtain income when the cost incurred by the employer exceeds the amount of the allowance due (example 1)? It seems that the interpretation of the rules is obvious. A worker is entitled to a diet (sometimes reduced), but if he is provided with all-day meals, he is not entitled to a diet.

The employer therefore has a choice – either to pay the diet or not to pay it and to ensure that the worker is provided full-day food.

The rules do not provide for a compensation scheme for workers to whom employers provide meals at a cost lower than the amount of the diet (example No 3 and No 4 – call on the legislator to take account of current realities and to adjust them to the amount of the diet applicable).

The problem with the answer to this question is that when travelling domestically, the diet is intended to cover increased food costs rather than food costs. How can you compare the percentages of the diet per meal to the cost of the meal itself?

In this regard, tax authorities have often spoken. In the previous state of the law (when the provision of all-day meals excluded the payment of a diet), the authorities confirmed that:

„(…) if, in a specific factual situation, a business trip is involved, the amounts reimbursed to the staff member for expenses related to the business trip resulting from the invoice or account provided by the staff member, i.e. the costs of all-day meals during the business trip, shall be exempt under Article 21(1)(16) point (a) u.p.d.o.f. provided that the Company directly funds the costs of day-to-day meals of the employee, and staff on business trips are not paid on a diet".

After the provision of part of the meals to workers has already affected national diets (the legal status of 1 March 2013) the tax recognises that only if the value of the individual meals provided by the employer to the staff during the business trip does not exceed the corresponding limits laid down in the Regulation, i.e. the value of individual meals does not exceed the percentage of a given meal in the amount of the allowance, the employee does not generate income 9 .

However, the above interpretation assumes a false assumption. The provisions did not introduce any limits for meals. The proportion set out in the provisions of the Regulation on business travel relates to the amount of the diet to cover the increased food costs.

The limits therefore concern increased food costs and affect the reduction of the amount of the diet and do not concern the value of meals. This is reasonable and reasonable when we consider the price of meals. It's hard to feed for 30 PLN A day. The legislator indicated that this amount is intended to cover increased feeding costs.

Provincial Administrative Court in Warsaw, in judgment of 3 October 2013 10 did not divide the tax position and considered that the reimbursement of the expenses incurred during the business trip was not taxable income even if the expenses for meals exceeded the amount of the allowances, the reimbursement of the expenses for feeding the worker is fully exempt from taxation. At the same time, this amount represents the cost of obtaining revenues for the company (employer).

According to the Court of First Instance, “in a situation where the employees of the Company undertake business trips and purchase on behalf and on behalf of the Company as an employer meals which they consume during the journey, there will be no income taxed on the part of the Complainant’s employees, even if these expenses exceed the quota limits contained in the relevant regulations on the clearing of allowances and other costs related to business trips”.

By adopting a different argument, the court concluded that: “the flat-rate payment scheme is that the worker does not account for the amount of the lump sum spent by invoices or receipts. It is assumed that this is the amount of the lump sum that the worker has spent.

In fact, the employee may spend less than 23 PLN, which is actually his income. However, the legislator is not interested that such income has reached. This income was based on Article 21(1)(16) point (a) the Personal Income Tax Act released’.

In the judgment of the court in the event of full food costs being provided, “the employer switches to a system of accounting for actual expenditure and there will be no situation here that the worker will receive any amount of money that he will not spend and become his income, as in the case of a flat-rate settlement of allowances”.

Unfortunately, recent judgments are not beneficial to taxpayers and do not support such interpretation of the rules 11 .

Supreme Administrative Court in judgment of 5 October 2016 12 stated that ‘in the light of the rules, there must be no doubt that the diet is a normative definition of a benefit intended to cover the cost of feeding a worker during a business trip, including a comprehensive regulation setting out the consequences of all forms of feeding a worker during a business trip.

Resignation by the employer of the payment of the allowance for the provision of free and full meals does not mean that the exemption resulting from Article 21(1)(16) point (a) the Personal Income Tax Act”.

General Administrative Court referring to the Constitutional Court’s position defining the criteria for recognising the benefit to the worker as unpaid benefit 13 notes that the employee's income may be recognised as benefits which:

• • rod first, have been complied with with with the employee's consent (he used them voluntarily),
• • rod second, have been fulfilled in its interest (not in the interests of its employer) and have benefited it by increasing its assets or avoiding the expense it would have to bear,
• • rod third, This benefit is measurable and assigned to an individual worker (not available in a general way to all entities).

The Supreme Administrative Court considered that covering (reimbursement) the full cost of meals during a business trip was an expenditure incurred in the interests of the employee and that it had a tangible benefit for him.

The reimbursement is only subject to ‘increased feeding costs’ and this benefit as an integral part of the business trip is exempt from income tax.

1. Partial food when the value of individual meals exceeds certain limits – how to determine the income of the worker?

Referring to the content of the above judgment to the situation in which the worker is provided with partial meals and the value of individual meals varies and only the value one of which exceeds ‘limit’, the question arises how to determine the value of employee income in such a situation.

Example 5

Cost of individual meals: breakfast 5 PLN / Dinner 30 PLN / dinner 5 PLN = 40 PLN. Should the employee's income be added to the income in such a situation 15 PLN revenue? If yes, is he entitled to compensation in the amount 5 PLN (2 * 2.5 PLN for breakfast and dinner) who should benefit from the exemption?

Or is it just 10 PLN (summarum) should be added to the revenue? If, in the NSA assessment, the diet is a ‘comprehensive regulation’, the worker receives a benefit free of charge, the worker should not be paid a diet (all-day meals provided) and at the same time the amount 10 PLN is an example of his tax revenue.

However, what if partial food is provided with a value exceeding ‘limit’?

Example 6

Business trip continued 20 hours Cost of lunch provided to the staff member 25 PLN. Taking into account the limit ("comprehensive regulation") set by the amount of the diet due (30 PLN) at the same time the obligation to pay the allowance amount to the worker 15 PLN (only dinner is provided), then taking into account the NSA’s thesis, you should pay the employee a diet of 15 PLN (revenue released) and at the same time add to the income the amount 10 PLN (revenue from unpaid benefits received).

6. Conclusion

Legislative amendment In 2013 The rules governing the accounting of business trips did not carry out the expected thorough reform, but focused only on cosmetic changes. The consequences of this have been disputes in interpreting the laws we have had and dealing with in recent years.

The lack of precision in the rules governing the clearing of delegations, while leaving certain unregulated issues, creates great uncertainty in the application of the law. This later represents a significant burden for the administration and an unnecessary imposition on administrative courts.

It can only be expected that, taking into account the postulany de lege ferenda in the future, the legislator will once again lean on these regulations and make appropriate adjustments.

___________________________________________________________________

1 Cf. P. Dymlang, Controversy related to the accounting of the business trip. Part. 1 – diet and ‘national sections’ of foreign travel, monthly ‘Legal and Tax Advice’ No. 7 (12) July 2019, p. 40-44.

2 Regulation of the Minister of Labour and Social Policy 29 January 2013 on the claims owed to an employee employed in a state or local government budget unit for business travel (Journal of Laws of 2013, item 167).

3 Similar see http://www.rozliczeniedelegacji.pl/artykul ,228.4113,settlement-travel-service-in-light-new-regulation.html

4 Act of 26 July 1991 on income tax on individuals, i.e. Journal of Laws of 2019, item 1387 as amended; Further: u.p.d.o.f.

5 Cf. the individual interpretation of the Tax Chamber in Warsaw from 29 January 2009, No IPPB2/415-1508/08-2/MK in a confrontation with an individual interpretation of the Director of the Tax Chamber with 20 January 2009, No ILPB1/415-883/08-6/AMN.

6 see NSA resolution with 16 October 2006, reference no. II FPS 1/06.

7 see judgment of the Constitutional Tribunal of 8 July 2014, reference no. – K 7/13.

8 see final judgment of 25 February 2015, reference no. III SA/Wa 2227/14.

9 see individual interpretation of the Director of the Tax Chamber in Warsaw with 28 February 2014, No IPPB2/415-850/13-4/MG.

10 reference no. III SA/Wa 937/13.

11 See NSA judgments: from 11 September 2015, reference no. II FSK 1516/13 and 5 April 2016, reference no. II FSK 416/14.

12 reference no. II FSK 2521/14.

13 Judgment of 8 July 2014, reference no. K 7/13.