Bellerage

Lightening tax implications for employee’s apartment rent

Lightening tax implications for employee’s apartment rent

Tax authorities have confirmed that compensation of accommodation for employees is not subject to personal income tax (PIT) as long as it is provided for the benefit of the company.

Previously such compensation was treated as the employee’s personal income and therefore was subject to PIT and social taxes. According to the authorities, social taxes are still applicable but it is possible to avoid PIT if the compensation meets the company’s interests, namely:

-          Compensation was provided at the company’s initiative;

-          Accommodation is provided for a qualified employee who is relocating from another area;

-          The quality of  the premises is in line with the employee’s position.

Accommodation expenses remain deductible for profit tax purposes as long as the compensation is stated in the Labor Contract.