Pursuant to subsection 1 of § 48 of the Income Tax Act, employers pay income tax on fringe benefits granted to employees.
Based on clause 7 of subsection 1 of § 2 of the Social Tax Act, social tax is paid on fringe benefits within the meaning of the Income Tax Act, expressed in monetary terms, and on income tax payable on fringe benefits.
Declaration
The period of taxation of fringe benefits is one calendar month. The employer declares the fringe benefits granted to employees and income and social tax calculated on fringe benefits during a calendar month in Annex 4 of the form TSD, which must be submitted together with the form TSD to the Tax and Customs Board by the 10th day of the month following the calendar month in which the fringe benefit was granted. The tax amount is paid to the bank account of the Tax and Customs Board by the same date at the latest.
Legal basis
Handbook - taxation of fringe benefits
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Documents required for payment of compensation
To pay compensation, there must be a written decision, directive, or order from the employer, which shows the details of the person receiving the compensation, the amount of the compensation and the date of the ride or the period during which the made rides are compensated. A copy of the document certifying the right to use the car is attached to the written decision. A decision can also be made for a longer period than one calendar month.
Tax-exempt compensation can only be paid if records (driving log) of work rides are kept. Driving records must contain the data of the person using the car, data of the national registration plate of the car, the initial and final readings of the odometer for each work ride, and the date and purpose of each ride. The form in which the records are kept, e.g., on paper or electronically, does not matter. It is important that it contains the aforementioned data. As a result, tax-exempt compensation cannot be paid for future rides, but only for rides already made.
If the compensation for the use of a personal car is paid without keeping records, the payment is considered to be income from employment, which must be declared in Annex 1 of the form TSD (in the case of a non-resident, in Annex 2) in personalised form.
Last updated: 08.04.2024
Last updated: 09.04.2024