The Polish Deal affects the deemed income regulation under Article 12(2a) of the Personal Income Tax Act of 26 July 1991, which relates to employee’s use of a company car for private purposes.
Under previous law, the charge-free benefit (and hence additional income) that the employee was deemed to receive in respect of such use depended on engine capacity and was fixed as follows:
- PLN 250 monthly for cars with engine capacity of up to 1600 cm3,
- PLN 400 monthly for cars with engine capacity above 1600 cm3.
As of 1 January 2022, the deemed income will be fixed as follows:
- PLN 250 monthly if the car:
- has a motor output of up to 60 kW,
- is an electric car as defined in Article 2(12) of the Electromobility and Alternative Fuels Act of 11 January 2018 (Journal of Laws of 2021, items 110 and 1093) or a hydrogen-fuelled car as defined in Article 2(15) thereof;
- PLN 400 monthly if the car is not one mentioned above.
Such deemed income is, as all other employment income, subject to personal income tax and social insurance contributions.
In effect, as of 1 Jan 2022, employees having charge-free use for private purposes of company cars with an engine capacity of up to 1600 cm3 but a motor output of above 60 kW will be deemed to earn a higher income in respect of such use than before (PLN 400 instead of the previous PLN 250) and will thus pay higher income tax and social insurance contributions on such income, including a higher and non-deductible health insurance contribution.
If these issues pertain to your business and you are interested in our assistance, please contact us.
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