Corporate gym membership for employees: specifics of accounting and taxation

An employer often tries to encourage the company’s employees to play sportto be active and energetic. The most common way of organizing sports activities is to acquire the so-called corporate gym membership for employees. What the employer should know about organization, accounting and taxation of corporate gym membership – in the following.

Specifics of organization

Acquisition of the so-called corporate gym membership for employees is a very common way to make them healthier. The company pays for all its employees for the time in the gym. In order to exercise their right, employees of the company must present a pass or another document by which they can be identified at the entrance to the gym. Sometimes it is possible to name only a place of work, and the visitor to be allowed to perform sports exercises.

Advantage of this option is that the company should conclude a contract with the gym and pay for its lease.

PIT, WT and USC

If the company acquires a corporate gym membership, it can be used by any of its employees, but only at the time provided by the terms of the lease.

Every day, the number and composition of employees attending a gym may be different. In view of this, personalization of the cost of renting the gym is not possible. Consequently, the cost of acquiring a corporate gym membership (rental of a gym) can not be considered as income of employees. Consequently, they are not subject to the personal income tax and the war tax, and it is impossible to withdraw the unified social contribution.

Income tax

The subject to the income tax is determined by the accounting rules, so here everything will depend on how such costs are reflected in the accounting.

In accounting, they can not be linked to economic activity, so it is logical to include them in other expenses of operating activity and reflect them at the subaccount 949.

The payer of the income tax (both the high income and the lessor) does not adjust the financial result before taxation on non-economic expenses. Therefore, both in accounting and in tax accounting, such expenses are recognized by the company as expenses of the reporting period in which they to be carried out, and the company reduces the subject to taxation (financial result before taxation).

VAT

If the company rents the gym from a payer of the value added tax (hereinafter - VAT), then the payer has the right to include the amount of VAT, indicated in the tax invoice registered by the gym in URTI, to the tax credit.

As it is not possible to link the costs of renting the gym with the economic activity, it is necessary to calculate compensating tax liabilities in accordance with paras. “г” of para.198.5 of the Tax Code of Ukraine.