Is Reimbursement by Employer Taxable?

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NathanS
Posts: 7
Joined: Thu Mar 10, 2016 2:35 am

Is Reimbursement by Employer Taxable?

Post by NathanS » Mon Jul 11, 2016 2:30 pm

I am going to move Finland soon and waiting for my RP, and my employer assured the following,

1. One month Furnished Apartment - Company will pay the rent and I need to pay the tax
2. Visa Fee Reimbursement for me and my family
3. Flight tickets to me and my family
4. Additional luggage costs - Reimbursement

I am clear that No.1 mentioned above is taxable and I need to pay the tax. My question is, when my employer will either reimburse or pay the amount for the above services, whether I need to pay tax for No 2-3 mentioned above also?

Please help me to get to know more about the taxation?



Is Reimbursement by Employer Taxable?

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betelgeuse
Posts: 2621
Joined: Thu Aug 29, 2013 1:24 am

Re: Is Reimbursement by Employer Taxable?

Post by betelgeuse » Mon Jul 11, 2016 3:39 pm

NathanS wrote:I am going to move Finland soon and waiting for my RP, and my employer assured the following,

1. One month Furnished Apartment - Company will pay the rent and I need to pay the tax
2. Visa Fee Reimbursement for me and my family
3. Flight tickets to me and my family
4. Additional luggage costs - Reimbursement

I am clear that No.1 mentioned above is taxable and I need to pay the tax. My question is, when my employer will either reimburse or pay the amount for the above services, whether I need to pay tax for No 2-3 mentioned above also?

Please help me to get to know more about the taxation?
Call the numbers here and ask:

http://www.vero.fi/en-US/Tax_Administra ... nformation

You pay tax for 2-3 if they are considered your living costs. If they are considered business costs of the employer then they are tax free for you.


Rosamunda
Posts: 10609
Joined: Fri Jan 02, 2004 12:07 am

Re: Is Reimbursement by Employer Taxable?

Post by Rosamunda » Mon Jul 11, 2016 5:25 pm

NathanS wrote: I am clear that No.1 mentioned above is taxable and I need to pay the tax. My question is, when my employer will either reimburse or pay the amount for the above services
Ask your employer.

For example, one way these things are handled is that you pay the fees yourself (visa, excess luggage etc) and then you submit an expense claim and they will put the expenses into your bank account. This can be done as soon as you are officially employed (when is your start date?) and you have a bank account.

Concerning the flight tickets, if the employer has its own travel agent, they could book the tickets for you and pay for them up front. But there are other ways of doing it. Really the employer is the only person who can answer those questions.

I see no reason why you would be taxed on anything that is an out-of-pocket expense for you. Make sure you keep your receipts, boarding pass etc so you can prove that you incurred the expense and paid for it yourself if that is the case.


NathanS
Posts: 7
Joined: Thu Mar 10, 2016 2:35 am

Re: Is Reimbursement by Employer Taxable?

Post by NathanS » Mon Jul 11, 2016 7:27 pm

Rosamunda wrote:
Ask your employer.

For example, one way these things are handled is that you pay the fees yourself (visa, excess luggage etc) and then you submit an expense claim and they will put the expenses into your bank account. This can be done as soon as you are officially employed (when is your start date?) and you have a bank account.

Concerning the flight tickets, if the employer has its own travel agent, they could book the tickets for you and pay for them up front. But there are other ways of doing it. Really the employer is the only person who can answer those questions.

I see no reason why you would be taxed on anything that is an out-of-pocket expense for you. Make sure you keep your receipts, boarding pass etc so you can prove that you incurred the expense and paid for it yourself if that is the case.
Thanks for the responses,

I have asked the same questions to the employer and waiting for the response.

As you (Rosamunda) said, I am going to pay the Visa Fee and Extra Luggage from my pocket and submit and expense claim when I officially employed. My doubt is when the amount is reimbursed to my bank account, will that amount considered as income and taxed?

Yes, they will booking flight tickets using their own travel agent and I am not going to claim for that.


NathanS
Posts: 7
Joined: Thu Mar 10, 2016 2:35 am

Re: Is Reimbursement by Employer Taxable?

Post by NathanS » Mon Jul 11, 2016 7:28 pm

betelgeuse wrote:
Call the numbers here and ask:

http://www.vero.fi/en-US/Tax_Administra ... nformation

You pay tax for 2-3 if they are considered your living costs. If they are considered business costs of the employer then they are tax free for you.
Thank you, I will call tomorrow and check with them.


inkku
Posts: 603
Joined: Wed Apr 04, 2007 8:26 pm

Re: Is Reimbursement by Employer Taxable?

Post by inkku » Mon Jul 11, 2016 10:00 pm

Those are costs related to a duty travel, I don't see any reason where they would be taxed, doesn't make any sense.


betelgeuse
Posts: 2621
Joined: Thu Aug 29, 2013 1:24 am

Re: Is Reimbursement by Employer Taxable?

Post by betelgeuse » Tue Jul 12, 2016 2:40 pm

inkku wrote:Those are costs related to a duty travel, I don't see any reason where they would be taxed, doesn't make any sense.
It's not duty travel when you choose to start with a new employer in a new country. It would be duty travel for move within an organization. This KVL decision strongly hints that 2-3 would be taxable.

https://www.vero.fi/fi-FI/Syventavat_ve ... 006(11104)


inkku
Posts: 603
Joined: Wed Apr 04, 2007 8:26 pm

Re: Is Reimbursement by Employer Taxable?

Post by inkku » Tue Jul 12, 2016 3:26 pm

Relocation is a duty travel, it is not that you choose to move and get a new job but your employer sends you somewhere (in this case to Finland). It is not additional income, it is an expense which enables you to carry out your duties.


betelgeuse
Posts: 2621
Joined: Thu Aug 29, 2013 1:24 am

Re: Is Reimbursement by Employer Taxable?

Post by betelgeuse » Tue Jul 12, 2016 3:34 pm

inkku wrote:Relocation is a duty travel, it is not that you choose to move and get a new job but your employer sends you somewhere (in this case to Finland). It is not additional income, it is an expense which enables you to carry out your duties.
I don't think NathanS has specified which case we are dealing with there.


NathanS
Posts: 7
Joined: Thu Mar 10, 2016 2:35 am

Re: Is Reimbursement by Employer Taxable?

Post by NathanS » Wed Jul 13, 2016 10:46 am

betelgeuse wrote:
inkku wrote:Relocation is a duty travel, it is not that you choose to move and get a new job but your employer sends you somewhere (in this case to Finland). It is not additional income, it is an expense which enables you to carry out your duties.
I don't think NathanS has specified which case we are dealing with there.
I am going to relocate from India to Finland, what employer offered as part of relocation benefit is 1-4 mentioned in my initial post.


NathanS
Posts: 7
Joined: Thu Mar 10, 2016 2:35 am

Re: Is Reimbursement by Employer Taxable?

Post by NathanS » Wed Jul 13, 2016 10:50 am

NathanS wrote:
Rosamunda wrote:
Ask your employer.

For example, one way these things are handled is that you pay the fees yourself (visa, excess luggage etc) and then you submit an expense claim and they will put the expenses into your bank account. This can be done as soon as you are officially employed (when is your start date?) and you have a bank account.

Concerning the flight tickets, if the employer has its own travel agent, they could book the tickets for you and pay for them up front. But there are other ways of doing it. Really the employer is the only person who can answer those questions.

I see no reason why you would be taxed on anything that is an out-of-pocket expense for you. Make sure you keep your receipts, boarding pass etc so you can prove that you incurred the expense and paid for it yourself if that is the case.
Thanks for the responses,

I have asked the same questions to the employer and waiting for the response.

As you (Rosamunda) said, I am going to pay the Visa Fee and Extra Luggage from my pocket and submit and expense claim when I officially employed. My doubt is when the amount is reimbursed to my bank account, will that amount considered as income and taxed?

Yes, they will booking flight tickets using their own travel agent and I am not going to claim for that.
Employer told items 2-4 are not taxable and only rental re-reimbursement is taxable. But I got info (from a person who already relocated from India) that employer is not deducting the tax initially but at the end of the year tax authority asked him to pay it.


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