Granting employee discounts on the company’s products

Based on numerous positive individual tax rulings, it is possible to claim that, under certain conditions, granting employee discounts on the company’s products does not constitute taxable income.

What do the rulings concern?

According to the tax authorities, as reflected in the tax rulings, in case a discount is granted not only to the company’s employees, but also to other individuals (e.g. employee family members, the company’s subcontractors etc.), it should not be treated as a taxable benefit. According to the Polish Personal Income Tax Act (PIT Act), taxable employment income includes cash payments and monetary values of benefits in kind or their equivalents. However, in case the group of beneficiaries of a discount program is extended to include individuals who do not have an employment relationship with the company, it can be argued that such a discount does not constitute a taxable benefit for the individual.

When is it possible to claim that there is no employee benefit?

Tax rulings suggest that it is possible to claim there is no taxable benefit when:

• The discount program is addressed to a broad group of individuals which reaches outside the company’s employees (e.g. covering their household members or family members of the company’s subcontractors);
• The program’s terms and conditions are the same for employees and the remaining beneficiaries (i.e. the employees do not have preferential treatment);
• The price paid by the employees does not differ from the market price offered to other recipients (i.e. those covered by the program);
• The objective of the program is increasing sales volumes.

What are the benefits of not recognising employment income?

• No PIT and social security payments on this income, which will result in savings for the company and employee;
• Minimising administrative burdens connected with assessing and reporting employee income;
• Motivating those covered by the program to increase purchasing, as the offered discount will be final, i.e. it will not entail any additional PIT and social security costs, which would reduce the employee’s net salary payment.

If you have any further questions regarding this subject, or would like to receive additional information, please do not hesitate to contact our HR department.

HR Team