The press service of the State Tax Service of Ukraine (ДПСУ) reported that reimbursement of an employee’s travel expenses from home to work and back, when paid by the employer, is subject to taxation.
Why the reimbursement is considered taxable income
Ordinary trips from home to the workplace and back are not part of the performance of work duties; accordingly, the employer is not obliged to pay for them but may do so voluntarily. If such a payment is made, it is regarded as an employee benefit and is taxable, even if the employee substantiates the expenses with receipts or tickets.
Example from the source: if an employee received 1000 UAH as travel reimbursement, 180 UAH will be withheld as personal income tax (PIT) and 50 UAH as the military levy, leaving the employee with 770 UAH net. Compensation for regular public transport fares is also taxable.
Who calculates and pays the taxes
The employer is responsible for calculating, withholding and remitting the taxes to the budget. The employer acts as the tax agent (as the tax agent, the employer withholds and transfers the due amounts), so the employee does not need to pay these taxes themselves.
An annual declaration of assets and income (the declaration is the annual income-reporting form) does not need to be filed solely because travel reimbursement was received if the employer withheld the relevant taxes.
