Compensations for employees with a tax benefit

LEGAL DIGEST \ 20.03.2019

Starting from 1 January 2019, companies will be entitled to deduct as payroll expenses for profit tax purposes the value of travel packages and health resort treatment and rest tours in Russia that are purchased for employees and their family members.

According to the explanation of the Finance Ministry, it will be possible to deduct the expenses if such tours were purchased under a contract between the company and a tour operator or a tour agent for the benefit of an employee and his/her family members. If the tour was acquired in a different way, no such expenses will be permitted to be deducted for profit tax purposes.

The Russian Tax Code imposes the following restrictions:

• The expenses can be deducted in an amount not exceeding RUB 50,000 in total for the tax period for every employee for whom a travel package has been acquired.
• The total amount of the expenses involving the acquisition of travel packages and such expenses as contributions under voluntary medical insurance contracts (if any) cannot exceed 6% of the payroll expenses.

In addition, the following payments to employees can be deducted for profit tax purposes, provided that proper documents have been drawn up:

• compensation for the use of employees’ personal property for business purposes;
• the rental of employees’ personal property for business purposes;
• compensation for business travel;
• expenses on meals for employees;
• costs involving insurance for employees (voluntary medical insurance, insurance for travel abroad, etc.)
• compensation for gym costs.

Please contact Acsour’s specialists with respect to issues concerning how tax legislation should be applied.