Cash Fuel Allowance Is Subject to Social Security Contributions – What Employers Must Know

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Employers increasingly support employees who commute by car by offering a fuel allowance. Although this form of support is common, the way it is provided has significant legal and payroll implications.

According to the Social Insurance Institution (ZUS), as confirmed in an individual ruling issued on 26 January 2021 (DI/100000/43/994/2020), a cash fuel allowance must be included in the basis for calculating social security and health insurance contributions.

Here is what employers need to know.

General rule: almost all employment income is subject to contributions

Any income received under an employment relationship constitutes the basis for social security contributions unless it falls under one of the few exceptions listed in:

• § 2 of the Regulation of 18 December 1998 on the rules for determining the contribution base,

• remuneration for sick leave and social insurance benefits.

If a benefit is not explicitly listed, it is subject to contributions.

Why the fuel allowance is not excluded

§ 2(26) of the Regulation excludes certain material benefits, such as:

• goods or services provided at a price lower than retail,

• free or partially paid transport services.

Key point: The exemption applies to material or service-based benefits – not cash payments.

Courts repeatedly confirm that the list of exemptions is closed and must be interpreted strictly.

ZUS position: cash is always income

ZUS states clearly:

• The exemption applies only to material benefits where the employee co-pays part of the cost.

• Cash payments are treated as employment income without exception.

Therefore:

➡ A cash fuel allowance = subject to contributions in full.

Example

If an employee receives PLN 300 per month as a fuel allowance calculated by mileage:

• PLN 300 is added to the contribution base

• it is treated like regular income

• the form of reimbursement is irrelevant – cash = contribution base

  
  

How employers can avoid contributions

The only option is to provide a non-cash benefit, for example:

✔ a company fuel card

✔ a possibility to refuel on the company account

✔ regulated material benefits with partial employee participation

Only then is the difference between the market price and the employee’s co-payment exempt from contributions.

Cash is never exempt.

Summary

• Cash fuel allowance = fully subject to social security contributions

• Only non-cash material benefits may qualify for exemption

• Employers should review their internal regulations and benefit structures
  

Legal basis:

Articles 18(1–2) and 20(1) of the Act of 13 October 1998 on the Social Insurance System (consolidated text: Journal of Laws of 2025, item 350, as amended), § 1 and § 2(26) of the Regulation of the Minister of Labour and Social Policy of 18 December 1998 on the detailed rules for determining the basis for pension and disability insurance contributions (consolidated text: Journal of Laws of 2025, item 316).