In Finland, expenses for employees are subject to specific tax treatment and reimbursement guidelines. Knowing what qualifies as taxable or tax-free can help both employees and employers navigate reimbursements effectively.
Below is a detailed guide to expense reimbursements in Finland, covering key expense types and the necessary documentation to ensure compliance.
1. Are Personal Phone Bills Reimbursable?
Yes, but with tax implications. When an employer reimburses an employee’s personal phone bill, this reimbursement is classified as taxable income. This means it will be added to the employee's total income for tax purposes.
- Tax Treatment: Taxable income
2. How Are Transportation and Fuel Costs Managed?
Transportation and fuel expenses are eligible for tax-free reimbursement if specific requirements are met.
- Tax-Free Reimbursement Eligibility: To be reimbursed without incurring tax, these expenses can be claimed as a kilometre allowance.
- Required Documentation: Employees must submit a travel diary that documents each trip to qualify for tax-free treatment.
- If No Travel Diary is Submitted: Without a travel diary, any reimbursement for transportation and fuel costs will be treated as taxable income.
3. What Rules Apply to Business Meals and Alcohol?
Reimbursement for business meals and alcohol follows stricter guidelines.
- Standard Tax Treatment: Business meals and alcohol expenses cannot be reimbursed tax-free based solely on receipts.
- Conditions for Tax-Free Reimbursement:
- Employees must submit a travel diary.
- Expenses can then be processed as part of a per diem allowance, which is tax-free for one per diem per travel day.
- Additional Per Diems: Any additional per diems beyond the first per travel day will be considered taxable income.
4. How Is the Travel Allowance Processed?
Employees have the option to claim either a travel allowance or itemized expense reimbursements—but not both.
- Single Option Requirement: Only one type of reimbursement can be claimed for each trip.
- Documentation for Tax-Free Reimbursement:
- A travel diary is required to process per diems and kilometre allowances as tax-free reimbursements.
5. Are Hotel Accommodation, Flights, and Event Fees Reimbursable?
Yes, hotel accommodation, flights, and event fees can be reimbursed tax-free when supported by valid receipts.
- Tax Treatment: These expenses are classified as tax-free reimbursements provided the employee submits legitimate receipts.
Key Compliance Takeaway
Following these guidelines for expense reimbursements in Finland is crucial for tax compliance. Proper documentation, particularly a travel diary, plays a vital role in determining tax-free eligibility and ensures smooth reimbursement processing.
For more details, we recommend reviewing the official website of the Finnish Tax Administration (officially called "Verohallinto in Finnish): Individuals - vero.fi
