December is a month full of gift-giving opportunities. Sometimes, the question arises whether a holiday or end-of-year surprise will impact your tax return. This question becomes especially pertinent when your employer is Santa Claus.
Generally, everything an employee receives from their employer constitutes income. Whether it's the use of a company car, a Christmas bonus, or tickets to the Vienna Philharmonic's New Year's Concert, the employer reports this income in the PIT-11 form, which must be submitted to the employee by the end of February of the following year. This, therefore, affects the employee's tax rate.
However, there are exceptions to this rule. One of these is the exemption of benefits received from the Company Social Benefits Fund. Benefits in kind and in cash, financed entirely from the Company Social Benefits Fund or trade union funds, are exempt. The amount of the exemption is limited. Typically, it was PLN 1,000. However, due to the introduction of the so-called Anti-Crisis Shield, this limit was raised to PLN 2,000 for the period from 2020 to 2023. Therefore, the higher tax-free benefit amount can only be used until the end of the year. However, the limit includes all benefits received by the employee during the year. The value of benefits exceeding the exemption amount is taxable. Under the Personal Income Tax Act, vouchers, coupons, and other tokens that entitle them to exchange for goods or services are not considered benefits. When paying benefits from the Social Fund due to increased holiday needs, it is also important to remember that their amounts vary. The employer should take into account the employee's family and financial situation, e.g. income per family member or disability.
However, not every employer is required to establish a company social benefits fund. If the employer does not have such a fund, the above exemption will not apply. Does this mean that giving a holiday gift will always result in an employee's tax liability? Not necessarily. A gift is usually given free of charge and does not constitute payment for goods or services. Therefore, it constitutes a gift and, as such, is subject to inheritance and gift tax.
An unrelated person (which will always be a legal entity, such as a company) is classified in tax group III. This means that a gift received from them will not be taxed up to PLN 5,644. However, this limit applies to all gifts received this year and in the five previous years. If the gift exceeds this limit, the excess will be taxed at 12% up to PLN 11,833, 16% up to PLN 23,665, and 20% above PLN 23,665.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of December 11, 2023
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