On 12 September 2024, the WSA(VoivodshipAdministrativeCourt) in Wroclaw issued a judgment (ref. I SA/Wr 251/24) stating that if the employees of certain departments are covered by third-party liability insurance, which they cannot opt out of (it is not voluntary) and which does not identify in advance the group of employees covered, then this is not constitute the income of the covered employees and is not taxable.

In the court’s view, such insurance fails to meet two of the three conditions set out by the Constitutional Court in its judgment of 8 July 2014 (case ref. K 7/13) that all have to be fulfilled in order for a gratuitous benefit to be deemed the employees’ income.

On 4 December 2024, a similar case concerning employee accident insurance was decided by the WSA in Gdansk (ref. I SA/Gd 814/24). In this case, however, the court held that the insurance, which employees cannot opt out of, should still be considered voluntary, as the employee may not have taken up employment knowing that they would be covered. In addition, the employer may indicate the employees covered and the period during which they benefit from this coverage (the period of employment).

Consequently, this insurance was considered by the court to be employee income within the meaning of the Constitutional Court judgment mentioned above.

Despite some differences in the circumstances of the two cases, it is difficult to justify such a divergence of rulings. Significantly, the judgments of the administrative courts were issued as a result of the recognition of complaints against individual interpretations issued by the Director of National Fiscal Information, who in both cases found that the insurance constitutes employees’ income.
Therefore, it can be assumed that this is the current position of the tax authorities – the premium paid by the employer to insure its employees constitutes their income and should be taxed, even if this benefit does not meet the definition of a gratuitous benefit as set out by the Constitutional Court.

If it is not taxed at the level of the employees, there is a risk for the employer that a possible tax audit will lead to a challenge by the authorities. This would result in the requirement to settle outstanding tax liabilities with interest, or a long legal action with an uncertain outcome.

Find more articles in PRO HR February 2025.