The company (employer) spent funds for employee training. How such investments are liable to tax - in the following.
PIT
According to the sub-paragraph 165.1.21 of the Tax Code of Ukraine (hereinafter - TCU), the total monthly (annual) taxable income of the taxpayer does not include, in particular, the amount paid by the employer in favor of domestic universities and vocational educational institutions for the individual, but not exceeding the amount, as defined in para.1 of sub-para.169.4.1 of TCU on each whole month or a fraction of a calendar month of training or retraining of the individual, regardless of whether he/she is in an employment relationship with the employer, but under the condition that he/she concluded with the employer a written agreement (contract) for commitments on working for this employer after the higher and/or vocational educational institution and getting a degree (qualification) not less than three years.
In accordance with para.1of sub-para.169.4.1 of TCU, paid amount should not exceed the amount equal to the size of the monthly living wage current for able-bodied person as of January 1 of the reporting tax year, multiplied by 1.4 and rounded to the nearest UAH 10 (in 2016 – UAH 1 930).
If the funds were paid by the company in a larger size, the excess amount to be subject to the personal income tax (hereinafter - PIT).
In the case of termination by the employee of the employment relationship with the employer during the period of such training or before the end of the third calendar year from a year, when this training ends, the amount paid as compensation for the training cost is equal to the additional benefits provided to such employee during the year, on which such termination of employment relations is accounted for by, and is the subject to taxation in the general procedure.
It should be noted that in accordance with the requirements of sub-paragra.165.1.37 of TCU, the taxable income does not include the amount of the employer’s costs in connection with the advanced training (retraining) of the taxpayer according to the law.
It should be reminded that on the basis of sub-para. 14.1.47 of TCU, additional benefit are funds, tangible or intangible goods, services, or other types of income that are paid (provided) to the taxpayer by a tax agent, if such income is not wage and is not connected with the performance of the duties of the labor recruitment or is not a reward according to civil contracts (agreements) concluded with such a taxpayer (except for cases directly provided by the norms of sec. IV of TCU).
But according to sub-para.164.2.17, the income received by the taxpayer as an additional benefit (except for cases under Art. 165 of TCU), should included in the total monthly (annual) taxable income of the taxpayer.
In accordance with para.164.5 of TCU, when the calculation (providing) of funds in any non-monetary form, the tax base is the cost of such income, calculated according to normal prices, the rules for determining of which are defined by TCU, multiplied by a coefficient, which is calculated by the formula:
C = 100 ÷ (100 - Tr),
where
C – coefficient;
Tr - tax rate established for such incomes at the time of their accrual.
Thus, if the amounts paid for training exceeded the maximum limit, or the employee terminates the employment relationship with the employer during the period of such training or before the end of the third calendar year from the year, when such training ends, the amount paid as compensation for the training cost is equal to the additional benefits provided to such employee, and is the subject to PIT at the rate of 18%.
When filling of Tax calculation according to the form № 1DF, the tax agent should be guided by the Procedure № 4 (approved by the Order of the Ministry of Finance of Ukraine of 13.01.2015, № 4). Thus, payment of training cost and the recognition of the payment as an additional benefit should be reflected in the tax calculation according to the form № 1DF. Together with the attribute of income “145” in the form № 1DF should be reflected the amount paid by the employer in favor of domestic universities and vocational educational institutions for individual for his/her training or retraining. But if all amount or its part paid for training to be taxable, such amounts should be reflected in the form № 1DF with the attribute of income “126”.
War tax
According to sub-para.1.2 of para.161 of subsection 10 of sec. XX of TCU, the subject to the war tax is the revenues determined by Art.163 of TCU.
In accordance with para.163.1 of Art.163 of TCU, the subject to taxation of a resident is:
- total monthly (annual) taxable income;
- incomes from the source of origin in Ukraine, which are finally taxed when they are accrued (paid, provided);
- foreign incomes - incomes (profit) obtained from sources outside of Ukraine.
Thus, according to sub-para.1.2 of para.161 of subsection 10 of sec. XX of TCU, the war tax should be withheld at a rate of 1.5% from the amount which is subject to PIT as an additional benefit.
