The costs of fuel financed by the employer providing the employee with a company car for private use are included in the lump sum revenue referred to in Article 12 (2a) the PIT Act - such a standpoint was presented by the Minister of Finance in a public ruling issued on September 11, 2020.

According to Art. 12 (2a) of the PIT Act, the amount of gratuitous benefit to which an employee is entitled when using a company car for private purposes is determined in the following amounts:

1. PLN 250 per month – for cars with engine capacity of up to 1,600 ccm,
2. PLN 400 per month – for cars with engine capacity of over 1,600 ccm.

If an employee uses a company car for private purposes only for a part of the month, the value of the benefit is calculated for each day the car was used at 1/30 of the amounts specified above. However, when an employee uses a company car for private purposes, incurring a partial payment for this benefit, the revenue on the employee’s part is the difference between the amount indicated above and the payment actually incurred by the employee.

Gratuitous benefit in the form of use of a company car for private purposes was regulated in PIT Act in order to facilitate the way of determining the value of that revenue. Over the years, however, different interpretations have occurred considering the correctness of the settlement of fuel costs within an employee’s lump-sum revenue. According to individual tax rulings issued by Head of the National Revenue Information Service, the lump sum includes, among other things, the costs of insurance or ongoing repairs, but it does not include the costs of fuel, to which the principle of determining the revenue based on market prices should be applied. However, the Minister of Finance has agreed with the line of rulings of administrative courts, which, taking into account complaints from taxpayers and tax remitters, have held that the lump sum revenue also includes the costs of fuel purchased by the employer.

According to the grounds given for the judgments issued by administrative courts, an employee uses a car in order to commute, which in turn involves incurring operating expenses, such as  tyre replacement. The purchase of fuel is a basic cost connected with the use of a vehicle, without which it would be impossible to use it in its basic function. Given that an employee’s revenue in the form of company car use for private purposes is determined as a lump sum without separation of the costs incurred in connection with the use of the car and fuel costs are not excluded, it should be assumed that the lump sum also covers fuel.

The Minister of Finance, in sharing the line of argument adopted by administrative courts, stated that the purchase of fuel is one of the necessary expenses which the car owner has to bear in order for the car to participate in traffic. In consequence, the lump sum benefit as  set out in the PIT Act also covers the fuel costs incurred by the employer.

Magdalena Walczyńska, Tax Consultant, ATA Tax Sp. z o.o.

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