Clients of our PRWT accounting office ask whether it is possible to exempt the posthumous allowance specified in the provisions of the Labor Code from taxation.

The prerequisites and the group of people entitled to posthumous allowance pay after the deceased employee are specified in Art. 93 of the Polish Labor Code. However, the question arises how is such a severance pay treated in terms of taxation, is it subject to taxation with personal income tax?

The answer to this question can be found in Art. 21 sec. 1 point 7 of the Polish Personal Income Tax Act. If we are talking about severance pay in the amount resulting from the provisions of the Polish Labor Code (Article 93 of the Polish Labor Code), the value of this amount is exempt from tax. However, it should be remembered that it could be a bit different if the employer provided for the possibility of granting a severance pay in the above amount in other (non-code) regulations, then each case should be analyzed in terms of tax.