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Poland: Payments to employees for remote work-related internet, electricity not taxable income (COVID-19)

Poland: Work-related internet, electricity not taxable

The head of the tax administration on 15 December 2020 issued a ruling (0115-KDIT2.4011.739.2020.1.RS) regarding the tax treatment of allowances paid to employees as compensation for their increased electricity and internet bills incurred in response to directions from their employers to work remotely because of the coronavirus (COVID-19) pandemic.


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Due to the pandemic, employers instructed their employees to work remotely. Employers paid or considered paying additional benefits in the form of an allowance (ranging in amounts from PLN 100 to PLN 150) for employees’ use of their internet connection and increased electricity and heating consumption, provided that the employees worked remotely at least 60% of their monthly hours of work. Employees would not be required to calculate their expenses and would not have to submit documentation to support the claimed expenses.

In the ruling, the employer-applicant asserted that the provided monetary benefit constituted income, but ought to be exempt from taxation pursuant to Article 21(1)(13) of the individual income tax law (that is, qualified as a cash equivalent for tools, materials or equipment being employees' property used by employees while performing their work).

The tax administration agreed that there would be no obligation to collect individual income tax on payments of advances for this type of benefit, but for other reasons. Pursuant to Article 3(4) of Poland’s COVID-19 law, tools, materials, and logistics service for remote work are to be provided by the employer, and this provision may be in-kind, as well as in the form of a benefit paid out for using an employee's own materials and tools.

In the ruling, the head of the tax administration stated that the benefits received by employees, regardless of their form, do not constitute income within the meaning of the Polish individual income tax law.

Read a December 2020 report prepared by the KPMG member firm in Poland

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