Partially funded non-cash benefits are exempt from social security

The Polish Social Security authorities have published a number of positive decisions regarding the exemption from social security and health insurance contributions for benefits in kind, which partially covers the cost of an employee.

According to the provisions on social and health insurance, the value of benefits in kind may be exempt from social security and health insurance contributions, in the event that the employer provide benefits in kind at a price lower than the retail market price, and the remaining part is financed by the employer (e.g. gym membership, private insurance packages, travel costs).

The possibility of non-cash benefits that are partially paid by the employee, to free themselves from social security and health insurance contributions has been confirmed by a series of decisions by the Social Security authorities. These indicate that the benefits in kind may still be exempt from social security and health insurance contributions, if they represent income subject to income tax on individuals.

The decisions by The Polish Social Security authorities explicitly state that the exemption for social and health insurance contributions only applies to payments in kind, resulting from collective agreements, compensation rules and procedures if:

• Provide overlap with the right to purchase certain products, services or the use of free or partially funded travel, at a price that is lower than the market retail price;
• The employee participates in the cost of acquisition benefits in kind.