Following the NSA judgment of 10 July 2018 reference no. II FSK 1185/16, in which it was confirmed that the employee's income for the use of a flat-rate service car 250 PLN or 400 PLN It also covers fuel per month, the question remains whether the tax will take a similar approach when assessing accounts.
An employee who uses a business car for private purposes does not obtain any additional income due to fuel consumption (service). It is covered by a monthly lump sum at certain rates, i.e.
250 PLN per month – for cars with engine capacity up to 1600 cm3 and 400 PLN per month – for cars with engine capacity above 1600 cm3.This was the position of the administrative courts in the following cases: WSA in Gorzów Wielkopolski in judgment with 18 January 2018 reference no.
I SA/Go 436/17; WSA in Wrocław in judgment of 23 November 2015 reference no. I SA/Wr 1595/15; WSA in Opole in judgment of 5 May 2016 reference no. I SA/Op 68/16; WSA in Kraków with 14 September 2016 reference no. I SA/Kr 824/16, WSA in Poznań with 11 May 2016 R., reference no.
I SA/Po 1766/15 and WSA Warsaw in judgment of 5 May 2016, reference no. III SA/Wa 1925/15.
However, despite the development of the case law in this case, only the Supreme Administrative Court ruling dated 10 July 2018, reference no. II FSK 1185/16, is a final confirmation that the value of the employee's revenue for the use of a business car for private purposes also includes making available to the fuel worker, which will not constitute a separate unpaid employee's benefit.
The judgment of the Supreme Administrative Court of 10 July 2018, reference no. II FSK 1185/16, confirms that the employee’s income from private use of a company car also includes fuel made available for that use and does not constitute a separate gratuitous benefit.
Fiskus was of the opinion that if the employer pays for the fuel for a business car used by the employee, the employee has an additional income from the employment relationship resulting from the employer's receiving "free" fuel for the car. The administrative courts in the above rulings disagreed with this view, and the Supreme Administrative Court disagreed with it, indicating that the regulations refer to the use of the car rather than the right to use it. Therefore, the amounts also cover fuel which does not constitute a separate benefit under the provisions in force. According to the NSA, the position of tax authorities on the division of operating charges related to the use of a car into those which should be added to the revenue (except for the statutory flat-rate) – such as fuel – and to those which do not constitute separate benefits (under the flat-rate) – such as insurance or tyre replacement. As interpreted point (e) an explicit and selective provision Article 12(2a). Act dated 26 July 1991 on income tax on natural persons: ‘The monetary value of the unpaid benefit for an employee for the use of a business car for private purposes shall be as follows:
- 1) 250 PLN per month – for cars with engine capacity up to 1600 cm3;
- 2) 400 PLN per month – for cars with engine capacity above 1600 cm3.’
Thus, the flat-rate bill for the use of the car for private purposes will also cover fuel costs, as it is an immanent element of the process of using the car in general. Consequently, the expenditure incurred by the employer on fuel for a business car, which the employee also uses for personal purposes, will not constitute a separate unpaid benefit.
The NSA noted that the contested provision could be used by taxpayers in an unauthorised manner, since the value of spent fuel given by the employer to the employee may exceed the flat rate. However, such an interpretation would require the intervention of the legislator, so that the fuel would have to be excluded from the scope of the lump sum.
In view of the large number of judicates of the administrative courts and the recent NSA judgment confirming that the value of fuel falls within the scope of the flat-rate income of the employee using a business car for private purposes, employers may apply the interpretation of the provision Article 12(2a) Personal income tax laws adopted by administrative courts and such action should not give rise to further doubts by tax authorities.
The question remains open as to how the NSA case-law will apply to the tax. It cannot be excluded that the doubts will eventually be dispelled by the Ministry of Finance, which may soon take the appropriate legislative initiative to exclude fuel from the lump sum.
Until then, however, it is worth taking advantage of the benefits and facilitations of covering fuel with a flat-rate employee's income for the use of a business car, instead of using complex and uncertain calculations of the part of fuel used for business and private purposes.
Author:
Aleksandra Księżyk
Director of the Legal Department in Warsaw. Legal advisor, from 2013 associated with Russell Bedford. He runs the Legal Department at the Chancellery Russell Bedford.