RC: Non-monetary payment as a benefit from the employer may also take the form of a monetary payment

The Income Taxes Act specifies that exempted income of an employee is a non-monetary benefit in the form of the use of medical, educational or recreational facilities and contribution to cultural or sporting events, provided by the employer to the employee while fulfilling additional conditions under the Income Taxes Act.

In a recent ruling No. 29 Af 89/2018-68 of December 2021, the Regional Court reaffirmed that in order to fulfil the conditions for exempted income of an employee, a non-monetary benefit from an employer for the employees might also take the form where the employees pay for the goods or services themselves and the employer provides them with earmarked funds, either in advance or against expenses already demonstrably incurred.

For the purposes of the personal income tax exemption, it is important that the bonuses be used for the purpose as if they were spent by the employer and not whether the goods or services are paid for directly by the employer to the supplier.

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