Cross-border secondment of workers Directive

In the tenth of the publications in series “12 Rules of the Cross-Border Secondment of Employees” presents the issue of regulating the situation of taxpayers under the EU Directive on the cross-border seconding of employees. In this series we will present the most important issues related to the process of seconding employees to another country. Each publication will present an individual issue in details. The entire series of articles will be a compendium of general knowledge on the cross-border seconding of employees.

EU Directives

Due to the increasing activity of employers and employees on the international labor market, arose the necessity of introduction the regulations that would unify the rights and obligations of the parties to the employment relationship. For that purpose, among others, Directive of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services (Basic Directive) was introduced. First of all, Basic Directive lists the employment conditions that employers must provide for seconded workers. The main purposes of introducing the Basic Directive are to guarantee the protection of employee’s rights and compliance with competition rules.

The Posting of Workers Directive results from the principle of freedom to provide services (Article 56 TFEU) and the EU’s obligation to eliminate obstacles to the free provision of cross-border services within the internal market.

The Basic Directive indicates that:

Another act that regulates the seconding of workers is Directive 2014/67/EU on the enforcement of Directive 96/71/EC concerning the posting of workers in the framework of the provision of services and Directive (EU) 2018/957 amending Directive 96/71 / EC concerning the posting of workers in the framework of the provisions of services.

The new regulations introduced new obligations for employers who are planning to second their employees to work in other Member States.

The main aim of the Directive on the cross-border seconding of employees is to regulate the working conditions that employers are obligated to provide to employees seconded to work in another Member State. It is motivated by the need to ensure the protection of employees’ fundamental rights in the context of the general freedom to provide services and to conclusion of contracts.

The EU legislator focused in particular on the regulating the issue of:

• the maximum work period and the minimum rest period,
• the minimum period of paid leave to which an employee is entitled,
• the appropriate minimum remuneration and remuneration for overtime worked,
• health and safety at work.

Employers seconding their employees are required to ensure employees the minimum working conditions specified in Directive. It also must be confirmed in the employment contract concluded between the parties.

EU law has also introduced an obligation to report the fact that workers are seconded to the competent institution operating in the country of secondment.

In the case of people seconded to another country, employers often pay the employee additional benefits to cover the costs of accommodation or travel. Sometimes companies rent apartments directly or buy plane tickets for delegated employees.

The position of the Polish tax authorities has been uniform for a long time that income from an employment relationship does not only constitute additional financial resources paid to delegated employees, but also all benefits provided to them in kind.

However, in accordance with Directive 96/71/EC, transport and accommodation costs should not be included in the remuneration of a posted employee. This is confirmed by the judgments of the Supreme Administrative Court of August 1, 2023 (II FSK 270/21), as well as of January 9, 2024 (II FSK 434/21; II FSK 1332/21) and of February 6, 2024 (II FSK 609/21).

The judgments of the Supreme Administrative Court constitute a breakthrough in the interpretation of tax regulations regarding benefits for posted employees. They confirm the compliance of Polish tax law with EU standards and provide greater legal certainty for both employers and employees.