The company sent the employee on a business trip. The employee had to spend much more money on certain needs. Whether the increasing factor is used to determine the tax base for personal income tax (hereinafter – PIT) if the amount of daily expenses used by employee business trip exceeds the established marginal norms read further.
Legislative grounds
If the amount of daily expenses used by an employee on a business trip exceeds the established limit, an increasing coefficient is used to determine the tax base of PIT. According to point 163.1.1 of the Tax Code of Ukraine (hereinafter – the Tax Code), the object of PIT taxation of a resident natural person is, in particular, the total monthly (annual) taxable income.
The list of incomes, which are included in the total monthly (annual) taxable income of the taxpayer, is determined by item 164.2 of the Tax Code.
According to point 164.2.11 of the Tax Code, the amount of excess funds received by the taxpayer for a business trip or that should be reported and not returned within the time limits established by law, the amount of which is calculated in accordance with item 170.9 of the Tax Code, are included in the total monthly (annual) taxable income of the taxpayer.
According to paragraph ‘a’ of point 170.9.1 of the Tax Code, taxable income does not include expenses for business trips, not documented, for food and financing other personal needs of an individual (daily expenses), incurred in connection with such a business trip within the territory of Ukraine, but not more than 0, 1 amount of the minimum wage established by law on January 1 of the tax (reporting) year, calculated for each calendar day of such a business trip, and for business trips abroad – no higher than 80 euros for each calendar day of such business trip at the official hryvnia to euro exchange rate, established by the National Bank, calculated for each such day.
The tax agent of the taxpayer during the taxation of the amount issued to the taxpayer for the report and not returned within the period established by point 170.9.3 of the Tax Code, there is a person who issued such an amount – in an amount that exceeds the amount of the taxpayer's expenses for such a business trip, calculated in accordance with paragraph ‘a’ of point 170.9.1 of the Tax Code.
According to point170.9.3 of the Tax Code documentary confirmation of the amount of actual expenses for a business trip or the performance of certain civil legal actions by providing supporting documents certifying the amount of such expenses, in the case of non-cash payments using payment instruments, including corporate (business) payment instruments or personal payment instruments , or their details, and returning to the person who issued the funds/electronic money for the report, the amount of excessively spent funds/electronic money, the amount of which is calculated in accordance with paragraph ‘a’ of point 170.9.1 of the Tax Code, is carried out by the taxpayer until the end of the month following the month in which the taxpayer:
a) completes such business trip;
b) completes the performance of a separate civil legal action on behalf of and at the expense of the person who issued the funds/electronic money for the report.
In the event that during a business trip or the performance of certain civil legal actions, the taxpayer used a payment instrument for making settlements, including a corporate (business) payment instrument or a personal payment instrument, or its details and debiting of funds/electronic money for incurred expenses is carried out by the payment service provider after the date when the taxpayer completes such a business trip or completes the performance of a separate civil-legal action, the terms established by this subsection shall be extended by one calendar month.
Algorithm of taxation
In accordance with item 164.5 of the Tax Code, when accruing (providing) income in any non-monetary form, the basis of taxation is the value of such income, calculated at ordinary prices, the rules for determining which are established in accordance with the Tax Code, multiplied by a coefficient calculated according to the following formula:
К = 100 : (100 – Сп),
where K is the coefficient;
Сп – the tax rate established for such income at the time of their accrual.
In the same manner, the object of taxation and the basis of taxation are determined for the funds excessively spent by the tax payer on a business trip or that should be reported and not returned within the terms established by law.
According to item 167.1 of the Tax Code, the personal income tax rate is 18% of the tax base for income accrued (paid, provided) to the payer (except for the cases specified in items 167.2 –167.5 of the Tax Code).
Thus, if the amount of daily expenses for a business trip exceeds the established by paragraph ‘a’ of point 170.9.1 of the Tax Code, then the amount of such an excess is subject to personal income tax and is determined in accordance with the procedure established by item 164.5 of the Tax Code, i.e. using a coefficient.
