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Taxation of excess travel expenses
Taxation of excess travel expenses
An employee is sent on a business trip within the country. In this case, even if he uses intercity taxi services or his private car, he cannot provide supporting documents. However, when using his private car, fuel receipts are presented. In this situation, are the fuel expenses exceeding the business trip allowance and intercity taxi expenses considered part of the employee’s employment income, and are these amounts subject to income tax and compulsory social insurance contributions?
The State Tax Service under the Ministry of Economy has stated that the income received by an individual in connection with employment – salary, any payment or benefit from such employment, including income received from previous or future employment – is considered employment income.
If the actual business trip expenses exceed the amount set by law, and if the reimbursement of actual expenses is made on the basis of supporting documents, such reimbursed expenses are not considered taxable income of the individual. The portion of actual business trip expenses exceeding the norms determined by the relevant executive authority is not deductible from income. If the amount of business trip expenses reimbursed above the legally established norms is not supported by proper documents, the part exceeding the norm is considered taxable income of the employee.
An employee is sent on a business trip within the country. In this case, even if he uses intercity taxi services or his private car, he cannot provide supporting documents. However, when using his private car, fuel receipts are presented. In this situation, are the fuel expenses exceeding the business trip allowance and intercity taxi expenses considered part of the employee’s employment income, and are these amounts subject to income tax and compulsory social insurance contributions?
The State Tax Service under the Ministry of Economy has stated that the income received by an individual in connection with employment – salary, any payment or benefit from such employment, including income received from previous or future employment – is considered employment income.
If the actual business trip expenses exceed the amount set by law, and if the reimbursement of actual expenses is made on the basis of supporting documents, such reimbursed expenses are not considered taxable income of the individual. The portion of actual business trip expenses exceeding the norms determined by the relevant executive authority is not deductible from income. If the amount of business trip expenses reimbursed above the legally established norms is not supported by proper documents, the part exceeding the norm is considered taxable income of the employee.