Travel expenses include an extensive list of possible expenditures, and when accounting for them each accountant may have questions. Anzhelika Maksimova, Acsour’s Accountant, spoke about accounting for travel expenses when calculating profits for “Raschet” magazine.
Business trip expenses for profits tax according to clause 12 of article 264 of the Tax Code relate to other expenses associated with production and/or sales. The law allows the inclusion in the scope of travel expenses of expenses for the employee’s travel to the destination of a business trip and back, as well as expenses for accommodation, a per diem allowance or field allowance, and other expenses incurred by the employee with the consent or knowledge of the company that have an economic rationale.
The procedure for payment, as well as the amount of expenses to be reimbursed that are associated with business trips, are determined by the internal documents of the organization or by a collective agreement. We would also like to note that if an employee has lost the original travel documents, including, for example, a boarding pass, it is possible to confirm the travel expenses with other documents such as: a duplicate ticket; a copy of it that is left with the transport organization; or a certificate from the transport organization indicating details that allow the individual, route, ticket price and date of the trip to be identified.
PER DIEM ALLOWANCE EXPENSES
When calculating profits tax, the entire amount of a per diem allowance paid to an employee can be included in expenses without limitation. However, it should be remembered that there is a standardization of the per diem allowance for calculating personal income tax (clause 1 of article 217 of the Tax Code of the Russian Federation): not more than 700 rubles for each day of a business trip within the Russian Federation and not more than 2,500 rubles for each day of a business trip outside of our country.
The per diem allowance is paid to employees for each day of their stay on a business trip, including weekends and public holidays, as well as for all days of travel (including the days of departure and return).
The most difficult point in accounting is the calculation of the per diem allowance for sending an employee abroad. Money for foreign business trips can be paid both in rubles and in foreign currency. A per diem allowance for the day of departure from Russia is paid according to the standards for foreign business trips, while for the day of entry into the Russian Federation it is paid according to the standards for Russia. In the case of a one-day business trip abroad, the per diem allowance should be calculated at the rate of 50% of the standard for foreign business trips.
It is interesting that if an employee was sent on a foreign business trip, but at the time of crossing the state border, he or she was not allowed to travel further, for example, owing to restrictions imposed by bailiffs, then the previously paid per diem allowance can be not only taken into account as part of the tax expenses, but can also be withheld from the employee. The money paid to the employee is not subject to reverse recovery, since it is not remuneration for labour, does not relate to salary, and is of a compensatory nature.
The following expenditures are included in travel expenses: the cost of a travel ticket for public transport (a plane, train, etc.), the cost of services for issuing travel tickets, the expenses of paying for bedding items on trains, as well as the cost of travel to the place (railway station, pier, airport) of departure on a business trip (or return from there), if it is located outside the locality where the employee works.
The company also has the right to stipulate in the regulations on business trips which class of comfort is assigned to certain employees when they are sent on a business trip. In this case, the organization will have the right to take into account tickets for the business class fare in the expenses, as, for example, the Ministry of Finance of Russia previously reported in its letter No. 03-03-04/2/114, dated April 21, 2006. If an employee goes on a business trip by rail transport in a high-comfort coach, additional services may be included in the ticket price, according to the Ministry of Finance of Russia, and the cost of such services can also be taken into account by the organization when calculating profits tax; the Ministry of Finance also expressed its opinion in its letter No. 03-03-06/1/37945, dated June 19, 2017. Please note that the cost of services is not included in the employee’s income that is subject to personal income tax. At the same time, if the price of food is allocated in a separate line in the ticket, these expenses are not taken into account for the taxation of profit.
In addition, organizations can include in the expenses that reduce profits the cost of freight of an aircraft on which an employee travelled to the business trip destination and back, as well as the cost of paying for the services of a high-comfort hall equipped with additional communication tools. This was also previously reported by the Ministry of Finance of Russia, in particular in its letter No. 03-03-06/1/365 dated June 7, 2007.
As we mentioned above, the organization has the right to take into account the expenses on travel to the railway station, airport, and the employee’s home, as well as to the place of his or her permanent work during the execution of a letter of assignment, while the means of transport that can be used is not specified in the Tax Code, and therefore it can also be a taxi ride. And if it is more or less clear, for example, with the travelling to the airport, then can the organization include any other taxi rides (at night time, to the office of partners, etc.) as part of the travel expenses? The opinion of the Ministry of Finance of Russia is that the cost of taxi travel can be taken into account as part of tax expenses, provided that they are documented and economically justified (letter No. 03-03- 07/23568 dated March 25, 2020), in other words, if you can justify them, for example, by a work schedule in which it is difficult to use public transport, or by the distance of the workplace or place of temporary residence from public transport stops, then taxi costs can be taken into account in tax expenses.
PUBLIC TRANSPORT EXPENSES
In addition, the employer has the right to provide for the reimbursement of expenses for public transport and to fix the relevant provisions in a collective agreement or in another internal regulatory document (IRD). In this case, expenses for public transport within the city limits while the employee is on a business trip, according to the Ministry of Finance of Russia as expressed in its letter No. 03-03-06/4/80 dated July 21, 2011, can be taken into account for profit taxation purposes.
CAR RENTAL EXPENSES
Renting a car on a business trip has recently become an increasingly popular mode of travel. And here the approach to accounting for expenses is similar to the above: if such a possibility is stipulated in the internal regulatory documents of the organization, the expenses for renting a car are documented and economically justified.
DOCUMENTARY CONFIRMATION OF TRAVEL EXPENSES
Travel expenses are accounted for profit tax purposes in the amount of the actual expenses incurred, as confirmed by the basic source documents. Let us take a closer look at what kind of basic source documents can be used to confirm certain travel expenses:
|Tickets||– itinerary receipt, electronic travel ticket audit coupon, air or railway ticket;|
– boarding pass with a check mark for air tickets;
– cash register receipt (electronic cash register receipt) for the purchase.
|Taxi||– cash register receipt;route information;|
– work order for the provision of a vehicle for the transportation of passengers and luggage (if available).
|Public transport||– ticket that contains the required details specified in Appendix No. 1 to the Rules for the Carriage of Passengers and Luggage.|
|Car rental expenses||– vehicle rental agreement;|
– cash register receipt confirming payment;
– documents confirming the use of the rented car during a business trip.
The procedure for payment and the rules regarding accommodation expenses are, similarly to other travel expenses, established by the organization in its IRD. In common with other expenses of the company, in order for them to be able to be taken into account when taxes on accommodation expenses are calculated, they should be economically justified and documented. The cost of additional services provided by hotels is included in the expenses and can be taken into account as travel expenses. The exceptions are expenses such as expenditure on serving an employee in bars and restaurants, expenses for using sanitary facilities, and the cost of room service.
BOOKING EXPENSES AND RESORT FEE
Payment for booking services can be considered an additional service provided by the hotel; therefore, it can be included in travel and tax expenses. Incidentally, the amount of a resort fee paid on a business trip also reduces the taxable profit.
Since employees can stay during a business trip not only in a hotel but can also, for example, lease an apartment, the question of proper documentation is very relevant:
|Hotel accommodation||– cash register receipt;|
– hotel invoice or certificate.
|Lease of an apartment from an individual||– lease agreement;|
– payment documents, such as an acknowledgement of receipt of money.
|Hotel booking via Booking.com||– document confirming the use of the employee’s card – abstract of account;|
– document certifying the payment for the hotel’s services and the receipt of money by the hotel.
The costs of processing and issuing visas and foreign passports may be included in other travel expenses. The expenses for visas include a state fee, a consular fee, and payment for the services of companies that provide services for processing documents. It should be noted that expenses for processing and issuing visas are taken into account as part of tax expenses only if the business trip took place; this was reported by the Ministry of Finance of Russia in its letter No. 03-03-04/2/134 dated May 6, 2006. Consular fees, airport fees, entry fees, and transit fees can also be taken into account when calculating taxes. As well as communications services – mail, telegraph, telephone, and the Internet – expenses for the transportation and storage of luggage, expenses for meetings with partners, hospitality expenses, and the purchase of medical insurance during the employee’s stay on a foreign business trip (provided that this is a mandatory condition for an entry visa to be issued) can also be taken into account. Do not forget that the rest of the travel expenses and the above additional costs should also be provided for by the company’s IRD and should be documented.
In conclusion, we would like to add that, in the opinion of the tax service’s officers, the lack of results in the form of concluded contracts or other signed documents does not indicate that travel expenses are non-work-related in nature (letter No. 16-15/082607.2 of the Federal Tax Service Directorate for Moscow dated August 11, 2009). Therefore, even if the employee did not achieve any obvious positive results after the business trip, with proper documenting, the organization can take into account the expenses for the business trip when calculating profits tax.