Companies in order to motivate and pay their employees in addition to the basic salary offer their employees a range of benefits, such as sports packages and medical care. More and more companies are opting for the introduction of interest-free loans for their employees. It is worth examining what tax implications brings such benefit.
The Act of 09.09.2000 on the taxation of civil law transactions includes civil liability actions i.e. loan agreement. The rate of tax on civil law transactions for the employee loan is 2% of its value. The borrower is a taxpayer. In this case it’s the employee. He/she is obliged to make a declaration and pay the tax rather than a company.
The Act also provides certain exemptions from taxation, and here there are doubts as to the interpretation of the rules. Article 2, paragraph 4 of the Law on the tax for civil law provides that no tax shall be subject to civil action, other than the articles of association and its amendments, if at least one of the parties with respect to this action is subject to VAT or exempt from it. Services relating to the provision of loans are exempt due to Art. 43 paragraph. 1 Section 38 of the Act on tax on goods and services.
The decision whether an entrepreneur (a VAT payer), who provides a loan to their employee is acting as a taxpayer, raises a number of controversies and may be questioned by the tax authorities. This position was supported by, among others judgment of the Administrative Court in Gliwice 14.04.2010 (file I SA / Gl 776/09).
In similar cases has already been given a number of interpretations and judgments, which, unfortunately, contradict each other. Include, among others the interpretation adopted by the Director of the Tax Chamber in Poznan March 12, 2013, Ref. ILPB2/436-329/12-2/MK where an authority confirms that loans to employees are not subject to tax on civil law transactions.
In a situation of such differences in interpretation should apply for individual interpretation.
Please note that the present subject has been presented for general guidance on the matter and it does not represent a customized professional advice. Furthermore, because the legislation is changing continuously, some of the information may have been modified after the above opinion has been released and Accace does not take any responsibility and is not liable for any potential risks or damages caused by taking actions based on the information provided herein.
Contact:Magdalena Kapka Senior Accountant