Confida news | Employee transportation costs

On 25 April 2019, the Tax Authorities issued an official notice to the Serbian Chamber of Commerce regarding the issue employee’s transportation cost taking into consideration the Ministry of Finance opinion no. 011-00-12/2019-4 dated 1 February 2019.

The Labor Law prescribes the employee’s entitlement to compensation of costs of transportation to and from work, based the general corporate regulation and employment contract, which shall be in the amount of the price of a public transportation ticket, unless the employer has organized own transportation, which compensation according to the same law shall not be considered salary.

Article 118 paragraph 1 item 1) of the Labor Law specifies that an employee is entitled to compensation of costs of transportation to and from work, based the general corporate regulation and employment contract, which shall be in the amount of the price of a public transportation ticket unless the employer has organized own transportation.

Article 18 paragraph 1 item 1 of the Personal Income Tax Law specifies that salary tax is not paid on employee’s earnings from employer for compensation of costs of transportation to and from work – up to the amount of the monthly transportation ticket in public transport, or in the amount of actual transportation costs, and at most up to 3,914.00 dinars per month (non-taxable amount of costs of transportation to and from work which is effective in the period from 1 February 2019 to 31 January 2020).

The Ministry of Finance opinion no. 011-00-12/2019-04 dated 1 February 2019, provides among other things that if the employer does not have valid accounting documents as proof that costs of employee’s transportation to and from work have been compensated adequately (for example invoice for the purchase of a monthly ticket, a daily ticket or a single ticket for the use of public transport, an invoice for fuel, in case of use of own vehicle, etc.), such costs cannot be recognized as an expense.

Therefore, based on the above provisions of the Labor Law and the Personal Income Tax Law, and the Ministry of Finance opinion no. 011-00-12/2019-04 dated 1 February 2019, employers– taxpayers are required to have valid accounting documents as a basis for payments made to employees for compensation of costs of transportation to and from work.

Invoices needed for documentation are: purchase of a monthly ticket, a daily ticket or a single ticket for the use of public transport, an invoice for fuel, in case of use of own vehicle, etc. based on which in a tax audit it can be proven that such payments actually represent compensation of employees’ costs of transportation to and from work.

Therefore, in a general corporate regulation, a collective agreement or employment rulebook, as well as in an employment contract, an employer regulates in greater detail the employee’s entitlement to payment of costs of transportation to and from work, as well as the amount of compensation of costs of transportation to and from work, taking into account the distance from the employee’s place of residence to work, and the way in which employees’ costs of transportation are to be compensated.

Employees’ costs of transportation:

  • purchase of a monthly ticket for public transportation or
  • cash payment in the amount of a monthly ticket for public transportation, etc.,

Where the employer is required to possess evidence that paid transportation expenses of employees are compensation of costs of transportation of employees to and from work. Such as:

  • receipts for the purchase of monthly tickets,
  • daily tickets or tickets for a single ride in public transportation,
  • fiscal receipts and invoices for fuel in the name of the recipient of compensation, in the event of use of own vehicle, where it is required for fuel in receipts for fuel consumed for transportation of employee, from place of residence to place of work, corresponds to the actual amount of fuel consumed for that distance.

The method for measuring the distance from the employee’s place of residence to place of work, as well as fuel consumption norm for such distance, shall be specified by the taxpayer in their internal company documents.

Example: Average consumption in kilometers established based on manufacturer’s declaration of consumption for a particular vehicle X distance from employee’s place of residence to place of work X 2 (for each workday) X number of days in the month in which the employee came to work = amount of documented costs which can be recognized, and up to the maximum amount specified in article 118 paragraph 1 item 1) of the Labor Law.

The notice states that audit guidelines are currently prepared by the Tax Authorities that will define in more details how the Tax Authorities will audit the payment of employees’ costs of transportation to and from work.

If you have any questions or you need assistance of our tax professionals, please contact us at tax@confida.rs

2019-05-13T13:11:23+00:00 May 13th, 2019|

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