Building a reputation as an employer that values its employees will boost your success as a foreign-owned business in Poland, and offering bonuses is a great place to start.
Many employers in Poland provide Christmas bonuses as a gesture of appreciation and goodwill to their employees. Alongside (or instead of) traditional cash bonuses, some employers offer gift vouchers or physical gifts like holiday baskets at Christmas.
In this article, Leinonen will explore the culture and expectations around Christmas bonuses in Poland, and discuss the impact of providing bonuses on accounting, tax and payroll in Poland.
Why Offer Christmas Bonuses in Poland?
Research shows that employees in Poland value Christmas bonuses and gifts; in 2024, research by Pracuj.pl found that 86% of employees would like to receive a one-time Christmas financial bonus, and 36% would appreciate a gift from their employer.
The same study found that more employees expected to receive a holiday bonus in 2024 versus 2023, suggesting that more Polish companies may be opting to provide Christmas bonuses in recent years.
While meaningful, personalised cash and non-cash rewards can boost employee morale and performance, it is vital to maintain compliance with tax and labour regulations when providing Christmas bonuses in Poland.
What are the Legal Definitions for Bonuses and Non-cash Gifts?
According to Polish labour law, bonuses are generally classed as additional remuneration, which means they are subject to standard payroll rules. On the flipside, non-cash gifts may be treated as benefits in kind.
Gifts Financed by the Company Social Benefits Fund (ZFŚS)
Non-cash gifts financed by ZFŚS may be treated differently under labour and tax law; if properly documented, they often qualify for exemptions.
ZFŚS is typically used to provide employee benefits like:
- Cultural and educational activities
- Sports and recreational activities
- Childcare services (e.g., daycare, nannies)
Taxation of Cash Bonuses and Non-cash Gifts in Poland
Cash Bonuses
Cash bonuses in Poland are treated as regular income. This means that, like standard salary payments, they are subject to Personal Income Tax (PIT) and social security contributions (ZUS).
Non-cash Gifts
Non-cash gifts are also subject to PIT and ZUS in most cases, though there are a few exceptions. Gifts financed from ZFŚS may be exempt from PIT and ZUS contributions up to PLN 1,000 annually.
To qualify for this exemption, a gift must be:
- Occasional
- Entirely funded by ZFŚS
- Not part of regular remuneration
- Not funded by regular company resources
Accounting Rules for Christmas Bonuses in Poland
How Should Bonuses and Non-cash Gift Expenses be Recorded in Accounting Books?
- Cash bonuses should be recorded under payroll expenses
- Non-cash gifts can sometimes be posted under employee benefits or other operating expenses, depending on the nature of the gift
- Expenses financed from ZFŚS should be recorded separately under social fund expenditures in accordance with fund regulations and accounting standards
Are Christmas Expenses Deductible for Corporate Income Tax (CIT) Purposes?
As long as they are properly documented and related to employee benefits, Christmas related expenses are usually deductible for CIT purposes. However, expenses financed by ZFŚS are not deductible for CIT. This is because the fund itself is not part of the company’s taxable income.
Payroll Considerations for Christmas Bonuses in Poland
Bonuses can be processed within the regular payroll run, but some companies prefer to handle them separately for increased clarity and easier tracking. Bonuses financed from ZFŚS must be processed on a separate payroll list to ensure proper classification and compliance with fund regulations.
Recommended Timeline
It is recommended that companies calculate and disburse bonuses by mid-December. This helps ensure timely payroll processing and compliance with reporting deadlines.
Supporting Documentation
The following supporting documentation should be provided:
- Payroll lists
- Internal bonus policies or regulations
- Proof of disbursement
For non-cash gifts, the following may also be required:
- Invoices
- Distribution lists
For ZFŚS funded gifts, the following must be provided:
- Fund approval
- Employee eligibility criteria
- Distribution records in accordance with ZFŚS policies
Reporting Obligations
Bonuses must be reported through standard payroll channels, including PIT-11 and ZUS RCA forms. ZFŚS funded benefits must be reported separately if they exceed exemption thresholds, or if they do not meet the criteria for tax free treatment. Incorrect classification or late reporting may result in penalties from tax authorities or ZUS, including interest on unpaid contributions.
Important Things to Consider When Organising Christmas Bonuses in Poland
Bonuses in January Instead of December: What are the Implications?
Paying bonuses in January shifts the tax liability to the following year, which can affect tax planning for both the employer and the employee.
Cash vs. Non-cash Rewards: Which is Better for tax and Payroll in Poland?
Cash and non-cash rewards are both popular choices for companies in Poland. Each option has its own pros and cons, as summarised below.
| Type of Reward | Benefits | Drawbacks |
|---|---|---|
| Cash | Straightforward | Fully taxable |
| Non-cash | May offer tax optimisation opportunities (if structured properly) | Requires careful documentation and compliance |
Leinonen: Helping Foreign-owned Businesses in Poland Manage Christmas Bonuses
Understanding tax and payroll regulations surrounding Christmas bonuses in Poland can be confusing and time consuming for foreign-owned businesses, but staying compliant is essential to avoid costly penalties. For more than 17 years, Leinonen’s local accounting experts have provided vital tax and payroll support for 80+ foreign-owned businesses in Poland.
Provide the Christmas bonuses your employees deserve with confidence – consult with a Leinonen Poland expert for unparalleled local expertise.
