Payment from the Social Insurance Fund (ZFŚS) to access cards for sports activities is exempt from personal tax (PIT) – we learn from one of the latest tax rulings.
The company, which is a PIT payer, among others, for salaries paid to employees employed on the basis of employment contracts, applied for an individual interpretation of tax law. The company had doubts as to whether there would be no tax liability for personal income tax in the event of paying employees to sports cards from ZFŚS.
The company pointed out that sports cards issued to employees were name cards which could not be made available to people third, and the turnover or sale of the card by its user to persons third He was forbidden.
The Director of National Tax Information stated that payments from the company's social benefit fund to access cards to sports activities are exempt from personal tax. He also pointed out that an important point of financing benefits in kind for the application of the tax exemption is necessary for the employer not to finance these benefits from sources other than ZFŚS
In its request to the Director of National Tax Information, for an individual interpretation of personal income tax, the company asked whether the subsidy to sports cards from ZFŚS is a benefit benefiting from income tax exemption on the basis of Article 21(1)(67) Act of 26 July 1991 on personal income tax (Journal of Laws of 2019, item 1387).
This provision provides that ‘the value received by the employee in connection with the financing of social activities referred to in the provisions on the occupational social benefit fund, benefits in kind and benefits received by the employee in this respect, financed entirely from the share-fund of social benefits or trade union funds, together with the amount not exceeding in the tax year the amount 1,000 PLN; The benefits in kind are not vouchers, vouchers and other marks which entitle them to be exchanged for goods or services.’ According to the company, co-financing of sports cards from ZFŚS will be the income of the employee from the employment relationship and will therefore be subject to income tax on individuals.
According to the company, the employee would receive the so-called other marks which entitle him to exchange them for certain services by co-financing to the sports card, so the Company considers that this co-financing should be taxed in its entirety as income from the employment relationship referred to in Article 12(1) u.p.d.o.f.
However, the company did not agree with the Director of National Tax Information, indicating that Article 21(1)(67) u.p.d.o.f. exempts from income tax benefits received by the employee in kind financed by ZFŚS. The Director of the CIS justified his position by the fact that the tax exempt on the basis of that provision is the value of the benefits received by the employee if the following cumulative conditions are met:
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- benefits are linked to the financing of social activities,
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- benefits are either in kind or in cash,
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- are financed entirely by the Institutional Social Benefits Fund or trade union funds,
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- their amount does not exceed in the tax year the amount 1,000 PLN.
The Director of KIS further stressed that the wording used in that provision ‘financed entirely from an undertaking social benefit fund or trade union funds’ means that the employer is obliged to finance or co-finance benefits to the employee solely from those funds listed in the provision. This means that, for the application of the tax exemption, the source of financing of benefits in kind can only be those sources that come from the occupational social benefit fund,
The Director of National Tax Information stated that payments from the company's social benefit fund to access cards to sports activities are exempt from personal tax.
He also pointed out that an important point of financing benefits in kind for the application of the tax exemption is necessary for the employer not to finance these benefits from sources other than the share social benefit fund.
Therefore, there will be no tax liability in respect of personal income tax if employees are paid to sports cards by ZFŚS.
source: Based on the interpretation of the Director of National Tax Information from 3 September 2019, The signal. 0115-KDIT2-2.4011.349.2019.1.MU