Are business car journeys from the employee's home a free benefit?


It is the practice of entrepreneurs to equip their employees with company cars, especially when work involves numerous trips. However, it is controversial to determine whether the travel of the company car from the employee's home to the company's seat can be considered as a free benefit and therefore taxed with VAT.

Free benefits

Pursuant to Art. 11. paragraph 1 of the Personal Income Tax Act, revenues are received or made available to the taxpayer in the calendar year, money and cash values ​​as well as the value of received benefits in kind and other free benefits.

Moreover, pursuant to Art. 12 sec. 1 above of the Act, income from a service relationship, employment relationship, homework is all kinds of cash payments and the monetary value of benefits in kind or their equivalents, regardless of the source of financing these payments and benefits. In particular: basic salaries, remuneration for overtime, various types of bonuses, awards, equivalents for unused leave and all other amounts, regardless of whether their amount has been determined in advance. Moreover, these revenues include cash benefits paid for the employee and the value of other gratuitous or partially remunerated benefits.

Company car travel

The act clearly states that unpaid benefits constitute income from a business relationship and are subject to taxation. In this case, the key issue is to determine whether journeys by a company car from the employee's home should be included in the category of free benefits and therefore taxed accordingly. There is no precise provision regulating this issue in the act. Therefore, answers should be found in other binding provisions.

The position on this matter was taken by the Director of the Tax Chamber in Poznań. In the individual ruling of September 1, 2011 (ILPB2 / 415-642 / 11-2 / JK), it was explained that traveling with a company car from an employee's home to the company's office does not constitute a free benefit. Therefore, their value is not subject to personal income tax.

Providing a company car, in this case, results from the nature of work in a given position. In a situation where the car is used for business purposes, the expenses related to its use do not constitute the employee's income from the employment relationship. Therefore, journeys from the place of residence (the place where the company car is parked) to work and from work to the place of residence will not constitute income from the employment relationship in the form of unpaid benefit.

In this situation, the trips constitute the implementation of the official goal, which is care for the entrusted property of the company. This goal is expressed by parking the company car in a place that guarantees its safety to the highest possible degree, and thus ensures constant readiness for use and earning income.

The condition for the non-recognition of journeys for free services is that the entrepreneur designates a parking place for a company car. The determination of the place should be included in the internal regulations created by the entrepreneur and in the contract for the use of a company car concluded with the employee. In a situation where the employee uses the company car for private purposes, not related to commuting to work, the expenses related to the use of the car should be considered as a gratuitous benefit for the employee.