The social benefits for employees on the occasions of Christmas and Easter can either be funded by the Company Social Benefit Fund (ZFŚS) or from the company’s current assets. The tax consequences of such actions, both for the employer and the employees that receive such benefits, will depend on which fund is used to cover these costs. This refers also to the Christmas or Easter gifts (e.g. containing groceries, with which you can prepare at home traditional Christmas or Easter dishes).
If the employer finances the purchase of such employee gifts, as per the Act of 4th March 1994 on the Company Social Benefit Fund, then they should vary depending on the individual’s financial circumstances, living or family situation of the employee. However, if all employees receive gifts with the same monetary value, they must not be financed from ZFŚS, unless all people are in comparable financial conditions.
As a rule, benefits that an employee receives in the form of a Christmas or Easter gift package constitutes revenue from an employment relationship for the employee under Article 12. Paragraph 1 of the PIT Act, but not every gift, however, is taxable for the employee.
If the value of benefits in kind, including Christmas and Easter gifts, and cash benefits which are covered entirely using ZFŚS or trade union funds, does not exceed 380 PLN for each employee from the beginning of the year, then under Article 21.
Paragraph 1; Point 67 of the PIT Act, the employer does not have to declared as taxable income.
However, if the value of these benefits is higher than 380 PLN for an employee, the employer is obliged to count the additional revenue gained from the employment relationship by an employee in the month it achieved and to pay PIT on it. Meanwhile, under Article 21. Paragraph 1; Point 67 of the CIT Act, the concept ‘complete’ makes reference to the fact that it has to be covered in its entirety from the funding sources highlighted in the aforementioned regulation. This means that if the purchase of Christmas or Easter gifts is partially financed by the ZFŚS, and partly from current assets, the value of the benefit will not be tax free, regardless of the amount. However, this condition does not apply in the case where a portion of the benefit is funded from the Social Fund, and the remaining portion will be financed by the employees. Then the foregoing exemption shall be applied.
From the point of view of employees, the financing of Christmas or Easter gifts from the company’s current assets is less advantageous, as the value of those benefits for those employees will be subject to PIT in its entirety, regardless of the amount (subject to the exception provided for the case of people on retirement pensions and disability pensions).
Source: Wydawnictwo Wiedza i Praktyka Sp. z o.o. (December, 2015)