Benefits for mobile workers

This article will answer the following questions:

• When do we talk about a mobile worker?
• Which benefits paid to a mobile worker generate taxable income?
• What is the situation with social security contributions in the case of benefits paid to a mobile worker?

Although the concept of a "mobile worker" has not been directly regulated in law, it appears very often in doctrine and court decisions. An inherent feature of a person using this form of employment is performing work in conditions of constant movement. In this case, the place of work is often specified in the contract in terms of area – as the territory of the country, province or a specific region.

Due to the fact that constant changes in the employee's place of work are a characteristic feature of mobile work, this movement does not constitute a business trip (a business trip is in principle an incidental and temporary trip outside the place of work at the employer's request in order to perform a business task). Since the key and standard element of mobile work is the employee's constant movement within a specific area in order to perform specific work tasks, this movement cannot be considered a business trip, because the feature of the incidentality of this event is not met.

Free benefit as income for a mobile worker

In connection with the performance of work in a mode of constant movement, mobile workers often receive additional benefits from the employer, in addition to the basic salary. These are financed directly by the employer or covered by the employee and then reimbursed by the company.

In accordance with the provisions on personal income tax, all types of free benefits that result in an increase in the employee's assets based on the employment relationship constitute employee income for them.

As the Constitutional Tribunal pointed out in one of its judgments, a free benefit constituting the income of an employee occurs when all of the following conditions are met:

• the benefit was provided with the employee's consent (they used it completely voluntarily);
• the benefit was provided in the employee's interest (and not in the employer's interest);
• it brought the employee a benefit in the form of increasing assets or avoiding an expense that they would have to incur;
• this benefit is measurable and assigned to an individual employee (it is not available in a general way to all entities).

Per diem and allowances for business trips

Per diem is a type of allowance due to an employee for business trips.

As we have already indicated above, a mobile employee who performs their work duties at a workplace agreed upon by the parties is not on a business trip, and therefore the employer is not obliged to pay per diem allowances and other payments in this respect. 

This does not mean, however, that a mobile employee can never be on a business trip – if, at the employer's request, they perform a task that will be required to be performed in an area not indicated in the employment contract as the place of work, then in this respect we may be talking about a business trip. In such a case, the mobile employee will be entitled to all entitlements related to the business trip.

Mobile work and provision of free accommodation

As a rule, courts and tax authorities take the position that the employer's financing of accommodation for mobile employees (resulting from the need to perform their work duties) does not constitute employee income, because this benefit is provided solely in the employer's interest.

Therefore, if providing accommodation for a mobile employee is necessary for the proper and effective performance of work duties (e.g. arriving on time to a contractor), the expenses for this do not constitute a benefit to the employee. They should be treated as the employer's fulfillment of the obligation to ensure proper organisation of work. Therefore, the employer will not be obliged to calculate, collect and pay advances on personal income tax in this respect. 

In this case, no income will be generated from free accommodation for the person performing mobile work – regardless of whether the expense is incurred by the employee and then reimbursed by the employer, or whether the latter incurs it directly.

Covering travel expenses for mobile workers

Travel expenses of mobile employees (e.g. fuel expenses, motorway tolls, parking fees) that are related to the performance of their employment duties do not constitute income from the employment relationship.

The tax authorities consider that these expenses are incurred in the employer's interest and are of a business nature, and therefore do not constitute any financial gain for the mobile employee. The employer is not obliged to settle personal income tax on the expenses for the mobile employee's travel related to the performance of their work duties.

Expenses incurred for business travel by a person performing mobile work will not constitute income for them – both when they are incurred directly by the employer and when the expense is incurred by the employee and then the employer reimburses the employee for the value of the expense incurred.

Performing mobile work and provision of free food

Employer expenses incurred in providing meals to a mobile employee while they are working constitute income for that employee.

Tax authorities believe that the financing or reimbursement by the employer of the expenses for the catering of a mobile employee is an action that brings them a measurable benefit, especially since the employee must bear the costs of the catering regardless of the performance of their professional duties. The financing by the employer of the costs of the catering (or their reimbursement) is not related to the organisation of work or equipping employees with the tools and materials necessary to perform the work.

The employer is therefore obliged to settle personal income tax advances in this respect.

Employee income and social security and health insurance contributions

If a specific benefit offered by an employer does not constitute income from an employment relationship within the meaning of the Personal Income Tax Act, there is no obligation to pay social security and health insurance contributions.

It should be remembered that depending on the type and place of work, the consequences in terms of employee income will be different. Correct determination of tax consequences requires a case-by-case analysis of the factual situation.

If you have any questions regarding the income of a mobile employee or need support in managing your company's tax issues, please contact us.