ALERT PRO HR: Entrepreneur test revisited | Company car fuel included in lump sum

Entrepreneur test revisited

With reference to the Pro HR Alert dated 23 April 2019, we would like to revisit the issue of the so-called “entrepreneur test”.
Following a media uproar, the government has distanced itself from the idea. It has been assumed that this applies to a test bearing that particular name, and that fight against bogus self-employment will remain on the agenda.
It now turns out that these assumptions were correct. A deputy minister of finance said last week in response to a representative’s question that while the Ministry had no plans to intensify control activities directed at sole traders, a Convergence Program update that had been approved by the government and sent to the European Commission foresees stricter rules for income to be classified as coming from non-farming business activities.
Regulations that are already there in tax laws will be applied, rather than the new ones.
Therefore, we can still expect audits with this focus, and, should they result in the entrepreneur status being effectively challenged, the need to revise tax and insurance returns on the part of the sole trader and the contracting company alike.

Company car fuel included in lump sum

According to tax laws, the monetary value of an employee’s benefit in the form of the use of company car for private purposes is set as a lump sum that varies with engine size: 250 zloty or 400 zloty per month. The regulations do not say whether these amounts include the cost of fuel bought for private purposes.
This issue has resulted in differing interpretations by courts and tax authorities practically from the moment the PIT Act came into force. Court rulings confirm that the lump-sum amounts include the additional costs of fuel purchase. The courts argue that cars must be filled up before they can be used. The law expressly mentions the use of the car, i.e. obtaining a benefit from it. The Director of the National Tax Information (DKIS) as a rule disagrees with this interpretation.
Recently, however, the DKIS has issued a number of interpretations agreeing with the applicants’ position, i.e. that the cost of fuel is included in the lump sum benefit. This, however, had required the applicants to successfully challenge the previously issued individual interpretations and to secure favorable court rulings. Other taxpayers and withholding agents should still expect to receive negative interpretations from the DKIS. They will have to challenge them in order to secure a favorable solution.

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