WSA: Laundry of contractors’ workwear is income – but exempt from PIT

Many companies work not only with employees on employment contracts but also with contractors. Their obligations often differ, especially when it comes to taxation or additional benefits. One of the controversial issues is the financing of workwear laundry.

Why does this raise doubts?

Contractors, just like employees, are often provided with protective or work clothing that must be kept in proper condition. If daily washing is required by the client, the question arises: who should bear the cost?

A company employing contractors on mandate contracts decided to pay them a laundry allowance. In its view, the payment served primarily the company’s interest and should not be treated as the contractor’s income.

Tax authority’s stance

The Director of the National Tax Information disagreed. He ruled that both the allowance and the reimbursement of actual laundry costs constitute income for the contractor. However, this income is exempt from PIT under Article 21(1)(11) of the PIT Act, which covers benefits related to health and safety requirements.

WSA ruling in Lublin

The company appealed, but the Provincial Administrative Court in Lublin (judgment of 11 June 2025, ref. I SA/Lu 146/25) upheld the tax authority’s interpretation. The court explained that:

• contractors obtain a tangible benefit since they avoid a personal expense,

• the contractual obligation does not change the fact that income arises,

• the company acts as the tax remitter, but the income remains exempt.

In practice, this means that covering contractors’ workwear laundry costs generates taxable income, but it is exempt from PIT – so no tax withholding is required.

Judgment of the Provincial Administrative Court in Lublin of 11 June 2025, case no. I SA/Lu 146/25