The final decision on tax treatment of transportation costs to employees

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Ministry of Finance has published on 1.2.2019 an opinion on documenting the costs of arrival and departure from work for employees. Each company has an obligation to properly document the costs, ie it is necessary to keep a record every month whether travel expenses for employees are covered and that there are documents justifying the costs of transportation.

Furthermore, the Ministry of Finance has issued opinion no. 430-00-648 / 2019-04 dated 17.1.2020 on tax treatment of compensation for costs of arrival and departure from work that have not been documented. Compensation for expenses for arrival and departure from work, to which an employee is entitled in accordance with the general act and the employment contract in accordance with the provisions of Article 118, paragraph 1, item 1) of the Labor Law (not considered as earnings under Article 105, paragraph 3) Of the Labor Law), no compulsory social security contributions are paid regardless of the tax treatment of such benefits under Article 18, paragraph 1, item 1) of the Law.

Finally, 3.6.2020, the Ministry of Finance issued another opinion number 011-00-00040 / 2019-04 which stipulates that the cost of transportation that is not documented by an appropriate credible accounting document is recognized as an expense in the tax balance pursuant to Article 9, paragraph 2 of the Corporate Tax Law.

So, the conclusion is:

  • reimbursement of these expenses that are not documented does not have the treatment of earnings, so that the reimbursement of expenses for arrival and departure from work is taxed at the rate of 10%,
  • At the same time, contributions for compulsory social insurance are not calculated and paid and
  • Transportation costs that are not documented by an appropriate credible accounting document are recognized as an expense in the tax balance.