The employee was transferred to work in another city. Are travel expenses to your place of permanent residence and back during vacation subject to personal income tax?

The employee was called back from vacation and compensated for travel expenses

The amount of payment (compensation) for an unscheduled flight (travel) of an employee from the place of vacation or back is fully subject to insurance contributions and personal income tax.

The Ministry of Finance is confident of this. In Letter No. 03-15-06/11330 dated February 21, 2019, the department answers the question of a company that had to call its director back from vacation for one working day. The company compensated the director for the flight from the place of rest to the place of work and back (after the director resolved the urgent issues for which he was needed).

The company was interested in: is this compensation subject to insurance premiums and personal income tax? According to the company, the payment was made for production purposes, and the work of the director (under an employment contract) is of a traveling nature, so it is possible to consider the payment exempt from personal income tax and contributions as compensation.

Officials explained that:

The list of amounts excluded from taxation by insurance premiums, set out in Article 422 of the Tax Code of the Russian Federation, is closed and does not contain such an item as compensation for the employee’s travel from vacation to work or back. Thus, there is no reason to exclude the amount of tickets paid to the employee for such movements. Travel compensation should be fully covered by insurance premiums.
Calling an employee back from vacation is possible only with the employee’s consent. At the same time, neither labor nor tax legislation contains a requirement for the employer to compensate the employee for travel expenses from vacation to work and back to vacation. That is, the director voluntarily interrupted his vacation, and the company voluntarily paid for his flight. Therefore, in this case we are not talking about any compensation exempt from personal income tax. Payment for such tickets is considered the income of the employee (whatever position and under whatever conditions he holds) and is subject to personal income tax on a general basis (Article 41 and Article 210 of the Tax Code of the Russian Federation).

On taxation of expenses for employee travel from home to work and back

Answer In accordance with paragraph 1 of Article 252 of the Tax Code of the Russian Federation, expenses for the purpose of calculating income tax are accepted in case of one-time compliance with the following criteria:

— economically justified;

- aimed at generating income;

- documented;

- are not directly named in Article 270 of the Tax Code of the Russian Federation.

Based on paragraph 26 of Article 270 of the Tax Code of the Russian Federation, when determining the tax base, expenses for travel to the place of work and back by public transport, special routes, departmental transport are not taken into account, with the exception of amounts to be included in the costs of production and sale of goods (work, services) due to technological features of production

, and
with the exception of cases where the cost of travel to the place of work and back is provided for by employment agreements (contracts) and (or) collective agreements
.

In our opinion, from the above norm it follows that paragraph 26 of Article 270 of the Tax Code of the Russian Federation provides for the possibility of recognizing for tax accounting purposes expenses for travel to and from work in the following cases:

1) in the case where costs are subject to inclusion in the costs of production and sale of goods (works, services) due to the technological features of production

;

2) in the case when the cost of travel to and from work is provided for by employment agreements (contracts) and (or) collective agreements

In our opinion, it follows from the above rule that there are two different grounds for recognizing such expenses for the purpose of calculating income tax.

In the first case

expenses are taken into account in accordance with the provisions of Article 264 of the Tax Code of the Russian Federation as other expenses associated with production and sales. The implementation of such expenses is caused by the technological features of production.

In the second case

expenses are taken into account in accordance with the provisions of Article 255 of the Tax Code of the Russian Federation as labor costs stipulated by labor and/or collective agreements.

In the case under consideration, payment for the employee’s travel to and from work is not determined by the technological features of production (distance from a populated area, lack of an accessible public transport route, etc.), but by the remoteness of the employee’s residence. In such a case, in our opinion, the first case does not apply.

With regard to the second case, we note that the Ministry of Finance of the Russian Federation takes the position that expenses for reimbursement of an employee’s travel expenses to and from work can be taken into account as expenses for profit tax purposes if such payment is a form of a remuneration system. If such a payment is not a form of remuneration system and is of a social nature[1], then such payment is not taken into account in expenses for profit tax purposes.

In accordance with Article 255 of the Tax Code of the Russian Federation, the taxpayer's expenses for wages include any accruals to employees in cash and (or) in kind, incentive accruals and allowances, compensation accruals related to working hours or working conditions, bonuses and one-time incentive accruals, expenses, related to the maintenance of these workers, provided for by the norms of the legislation of the Russian Federation, labor agreements (contracts) and (or) collective agreements.

In accordance with Article 135 of the Labor Code of the Russian Federation, an employee’s wages are established by an employment contract in accordance with the remuneration systems in force for a given employer.

Remuneration systems, including tariff rates, salaries (official salaries), additional payments and allowances of a compensatory nature, including for work in conditions deviating from normal, systems of additional payments and incentive allowances and bonus systems, are established by collective agreements, agreements, local regulatory acts in accordance with labor legislation and other regulatory legal acts containing labor law norms.

The Tax Code of the Russian Federation does not define what is meant by payments in kind.

According to Article 131 of the Labor Code of the Russian Federation, in accordance with a collective agreement or an employment contract, upon the written application of an employee, remuneration may be made in other forms that do not contradict the legislation of the Russian Federation and international treaties of the Russian Federation. The share of wages paid in non-monetary form cannot exceed 20 percent of the accrued monthly wage.

A different procedure for accounting for expenses for an employee’s travel to and from work will essentially not constitute an exception provided for in paragraph 26 of Article 270 of the Tax Code of the Russian Federation.

A similar opinion is expressed in Letter of the Ministry of Finance of the Russian Federation dated April 16, 2019 No. 03-03-07/26913:

“...According to the provisions of paragraph 1 of Article 252 of the Tax Code of the Russian Federation (hereinafter referred to as the Code), for the purpose of taxing the profits of organizations, expenses are recognized as economically justified and documented expenses incurred to carry out activities aimed at generating income. Expenses that do not meet the specified requirements, in accordance with paragraph 49 of Article 270 of the Code, are not taken into account for the purpose of taxing the profits of organizations.

At the same time, on the basis of paragraph 26 of Article 270 of the Code, when determining the tax base for income tax, expenses for travel to and from work by public transport, special routes, departmental transport are not taken into account, with the exception of amounts to be included in production costs and sale of goods (work, services) due to the technological features of production, and with the exception of cases when the cost of travel to the place of work and back is provided for by labor agreements (contracts) and (or) collective agreements.

In accordance with Article 255 of the Code, the taxpayer’s expenses for wages include any accruals to employees in cash and (or) in kind, incentive accruals and allowances, compensation accruals related to working hours or working conditions, bonuses and one-time incentive accruals, expenses associated with the maintenance of these workers, provided for by the norms of the legislation of the Russian Federation, labor agreements (contracts) and (or) collective agreements.

Thus, if an organization’s expenses for reimbursing an employee’s expenses for traveling to work and returning from work are a form of a remuneration system, then such expenses can be taken into account for the purposes of taxing the profits of organizations as part of labor costs, subject to the criteria of Article 252 of the Tax Code of the Russian Federation.

If the specified expenses of the organization are not a form of the remuneration system and are of a social nature, then such expenses cannot be taken into account when calculating the tax base for corporate income tax...”

The Letter of the Ministry of Finance of the Russian Federation dated March 16, 2017 No. 03-04-06/15198 states:

“...In accordance with the provisions of Article 252 of the Code, for the purpose of calculating corporate income tax, expenses are recognized as economically justified and documented expenses, provided that they were incurred to carry out activities aimed at generating income.

According to Article 255 of the Code, the taxpayer’s expenses for wages include any accruals to employees in cash and (or) in kind, incentive accruals and allowances, compensation accruals related to work hours or working conditions, bonuses and one-time incentive accruals, expenses related to the maintenance these employees, provided for by the norms of the legislation of the Russian Federation, labor agreements (contracts) and (or) collective agreements.

The list of labor costs established by Article 255 of the Code is not closed, and according to paragraph 25 of this article of the Code, labor costs also include other types of expenses incurred in favor of the employee, provided that they are provided for by the labor and (or) collective agreement.

At the same time, on the basis of paragraph 26 of Article 270 of the Code, when determining the tax base for corporate income tax, expenses for travel to and from the place of work by public transport, special routes, departmental transport are not taken into account, with the exception of cases where expenses for travel to the place of work work and vice versa are provided for by employment agreements (contracts) and (or) collective agreements.

At the same time, expenses for travel to the place of work of employees, provided for by labor and (or) collective agreements, are considered in the legislation of the Russian Federation on taxes and fees as expenses that reduce the size of the tax base for corporate income tax only if they are part of the system wages, since the inclusion of these amounts in labor costs, as in the case of other wage accruals, presupposes the ability to identify the specific amount of income of each employee (with the accrual of personal income tax).

In the absence of such a possibility, expenses for travel to the place of work of employees for the purpose of taxing the profits of organizations cannot be taken into account as part of labor costs, and another procedure for accounting for such payments in favor of employees, which are essentially social benefits, is not provided .
In this case, these expenses will not be an exception specified in paragraph 26 of Article 270 of the Code
...”

A similar opinion is expressed in Letter of the Ministry of Finance of the Russian Federation dated 04/19/19 No. 03-04-06/28569 on the issue of personal income tax, insurance premiums and income tax when paying non-resident employees the cost of travel to and from their place of work, and their accommodation at the place of work.

Taking into account the above, the Organization has the right to accept as expenses for profit tax purposes the payment of the employee’s travel costs to work and back, if such payment is provided for in the employment contract and is part of the remuneration system. In addition, such a payment, in our opinion, meets the criteria of Article 252 of the Tax Code of the Russian Federation, since due to the provision of the Organization with highly qualified personnel [2]

Personal income tax

Article 41 of the Tax Code of the Russian Federation defines income as an economic benefit in cash or in kind, taken into account if it is possible to evaluate it and to the extent that such benefit can be assessed, and determined for individuals in accordance with Chapter 23 of the Tax Code of the Russian Federation.

In accordance with paragraph 1 of Article 210 of the Tax Code of the Russian Federation, when determining the tax base for personal income tax, all income of the taxpayer received by him both in cash and in kind, or the right to dispose of which he has acquired, is taken into account, as well as income in the form material benefit.

According to paragraph 2 of Article 211 of the Tax Code of the Russian Federation, income received by a taxpayer in kind, in particular, includes:

1) payment (in whole or in part) for it by organizations or individual entrepreneurs for goods (work, services) or property rights, including utilities, food, recreation, training in the interests of the taxpayer.

The list of income exempt from personal income tax is contained in Article 217 of the Tax Code of the Russian Federation. This list does not provide for payment of the employee’s travel costs to and from work.

In the Letter of the Ministry of Finance of the Russian Federation dated 04/19/19 No. 03-04-06/28569 on the issue of personal income tax, insurance premiums and income tax when paying non-resident employees the cost of travel to and from their place of work, and their residence at the place of work, it is stated:

“...Article 41 of the Code defines income as an economic benefit in cash or in kind, taken into account if it is possible to assess it and to the extent that such benefit can be assessed, and determined for individuals in accordance with Chapter 23 “Income Tax on Individuals” » Code.

In accordance with paragraph 1 of Article 210 of the Code, when determining the tax base, all income of the taxpayer received by him, both in cash and in kind, or the right to dispose of which he has acquired, is taken into account.

According to subparagraph 1 of paragraph 2 of Article 211 of the Code, income received by a taxpayer in kind, in particular, includes payment (in whole or in part) for it by organizations for goods (work, services) or property rights, including utilities, food, recreation, training in the interests of the taxpayer.

Thus, payment by the organization for workers in their interests of the cost of travel of workers to and from the place of work, as well as their accommodation at the place of work is recognized as their income received in kind. Taking into account paragraph 1 of Article 211 of the Code, the amounts of this payment are included in the tax base for personal income tax.

The list of income not subject to personal income tax is contained in Article 217 of the Code.

Article 217 of the Code does not contain provisions providing for exemption from taxation of amounts paid by an organization for the cost of travel of employees to and from the place of work, as well as their accommodation at the place of work, and the specified income is subject to taxation on personal income in the prescribed manner...”

The Letter of the Ministry of Finance of the Russian Federation dated March 16, 2017 No. 03-04-06/15198 states:

According to paragraph 1 of Article 210 of the Code, when determining the tax base, all income of the taxpayer received by him both in cash and in kind is taken into account.

Article 41 of the Code defines income as an economic benefit in monetary or in-kind form, taken into account if it is possible to assess it and to the extent that such benefit can be assessed, and determined for individuals in accordance with Chapter 23 “Individual Income Tax” of the Code .

Payment for a taxpayer (in whole or in part) by organizations for goods (work, services) in his interests, in accordance with subparagraph 1 of paragraph 2 of Article 211 of the Code, is recognized as income received by the taxpayer in kind.

Thus, payment by an organization for travel of employees, provided that the employees have the opportunity to get to the place of work on their own, taking into account this norm, is recognized as their income received in kind.

Accordingly, the amount of the specified payment made in accordance with the agreement concluded with the transport organization is subject to personal income tax in the prescribed manner.

According to paragraph 1 of Article 211 of the Code, when a taxpayer receives income from organizations and individual entrepreneurs in kind in the form of goods (work, services), other property, the tax base is determined as the cost of these goods (work, services), other property, calculated on the basis of their prices , determined in a manner similar to that provided for in Article 105.3 of the Code...”

In Letter dated January 18, 2019 No. 03-03-06/1/20943 the following is noted:

“...According to Article 41 of the Tax Code of the Russian Federation, income is recognized as an economic benefit in monetary or in-kind form, taken into account if it is possible to evaluate it and to the extent that such benefit can be assessed, and determined for individuals in accordance with Chapter 23 “Income Tax on Individuals.” persons" of the Tax Code of the Russian Federation.

The list of income exempt from personal income tax is contained in Article 217 of the Tax Code of the Russian Federation.

Article 217 of the Tax Code of the Russian Federation does not contain provisions providing for exemption from personal income tax for amounts reimbursed by an organization for the cost of travel of employees to and from work, and the specified income is subject to personal income tax in the prescribed manner...”

Taking into account the above, payment by the Organization for an employee in his interests for the cost of travel to and from work is recognized as his income received in kind and is subject to personal income tax.

In our opinion, in the case under consideration, payment of the employee’s travel costs to the place of work and back can be considered by the Organization as a payment made in the interests of the Organization itself, because Payment of the cost of travel to and from the employee’s place of work is determined by the employee’s place of residence and the Organization’s need to provide highly qualified personnel (i.e., the qualifications the employee has). If payments to an employee are made in the interests of the employer, then such payments are not subject to personal income tax.

Thus, in the Review of Practice[3] of the Presidium of the Supreme Court of the Russian Federation on October 21, 2015 (paragraph 3) the following is stated:

“The receipt by an individual of benefits in the form of goods (work, services) and property rights paid for him is not subject to tax if the provision of such benefits is determined, first of all, by the interests of the person transferring (paying for) them, and not by the purpose of primarily satisfying the personal needs of the citizen.

The business company challenged in the arbitration court the decision of the tax authority to hold liable under Article 123 of the Tax Code of the Russian Federation in connection with failure to fulfill the duties of a tax agent to calculate, withhold and transfer to the budget tax when paying for the rent of apartments provided for accommodation to employees.

The tax authority did not recognize the company's demands.

To income received by a citizen in kind, the provisions of subparagraphs 1 - 2 of paragraph 2 of Article 211 of the Code include payment for it by organizations or individual entrepreneurs for goods (work, services) or property rights, including utilities, food and rest, or receipt of such benefits in the absence of reciprocal provision (free of charge) or on the basis of partial payment.

As indicated by the tax inspectorate, the organization, as an employer, entered into employment contracts with non-resident employees, under the terms of which the employer agreed to pay for the accommodation of citizens recruited to work in apartments specially rented for them. Since residential premises were used by the organization’s employees to satisfy personal needs (housing needs), in the opinion of the tax authority, when paying for accommodation, the employees generated income taxable in accordance with the above provisions of paragraph 2 of Article 211 of the Tax Code of the Russian Federation.

By the decision of the court of first instance, with the conclusions of which the courts of appeal and cassation agreed, bringing the company to tax liability was declared illegal for the following reasons.

As a mandatory sign of an individual receiving income in kind, the provisions of subparagraphs 1 - 2 of paragraph 2 of Article 211 of the Tax Code of the Russian Federation call the satisfaction of the interests of the citizen himself.

From which it follows that when deciding on the occurrence of income on the basis of this norm of the Code, it is necessary to take into account the direction of the costs of paying for a citizen for the corresponding goods (works, services) or property rights to satisfy the personal needs of an individual, or to achieve the goals pursued by the payer, for example , by the employer, to provide the necessary working conditions, increase the efficiency of performing the labor function, etc.

The mere fact that as a result of providing a citizen with the benefits paid for him, the personal needs of an individual are satisfied to a certain extent, is not sufficient to conclude that taxable income has arisen in kind

In this case, rental agreements for residential premises were concluded at the initiative of the employer in order to carry out the economic activities of the organization, namely, in connection with the opening of a branch located in another city, the need to attract non-resident workers to work in the branch with special experience and qualifications, who in the absence Such a need would not have changed their place of residence (stay) on their own.

The apartments provided to employees provided comfortable living, corresponded to the status of employees, but did not belong to the category of elite housing with elements of luxury, which could indicate that when choosing premises, the organization pursued the goal of meeting the individual needs of citizen workers, determined primarily by their chosen way life.

Thus, the costs of renting housing for employees were made by the organization primarily in its own interests, which indicates the absence of a prevailing interest of individuals and, accordingly, the absence of personal income subject to taxation on the basis of subparagraphs 1 - 2 of paragraph 2 of Article 211 of the Code."

Insurance premiums

Based on subparagraph 1 of paragraph 1 of Article 420 of the Tax Code of the Russian Federation, the object of taxation with insurance premiums for payers—

organizations making payments and other remuneration to individuals, payments and other remuneration in favor of such individuals who are subject to compulsory social insurance are recognized in accordance with federal laws on specific types of compulsory social insurance within the framework of labor relations and under civil law contracts, the subject of which are performance of work, provision of services.

According to paragraph 1 of Article 421 of the Tax Code of the Russian Federation, the basis for calculating insurance premiums for payers—

organizations making payments and other remuneration to individuals is determined at the end of each calendar month as the amount of payments and other remuneration provided for in paragraph 1 of Article 420 of the Tax Code of the Russian Federation, accrued separately in respect of each individual from the beginning of the billing period on an accrual basis, with the exception of the amounts specified in Article 422 of the Tax Code of the Russian Federation.

The list of payments to individuals not subject to insurance premiums is given in Article 422 of the Tax Code of the Russian Federation and is exhaustive.

In this list, payments to an individual within the framework of an employment relationship in the form of payment for the cost of his travel to and from work are not mentioned; therefore, such payments in favor of the employee are subject to insurance contributions in the generally established manner.

A similar opinion is expressed in the Letter of the Ministry of Finance of the Russian Federation dated 01/18/19 No. 03-03-06/1/2093, dated 04/19/19 No. 03-04-06/28569.

College of Tax Consultants, October 1, 2021

[1] From what is stated in the Ruling of the Supreme Court of the Russian Federation dated 01.02.16 No. 306-KG15-18624 in case No. A65-1930/2015, we can conclude that social payments are payments based on a collective agreement that are not stimulating, not depend on the qualifications of workers, complexity, quality, quantity, conditions of the work itself, do not constitute remuneration of workers (remuneration for labor), including because they are not provided for in employment contracts.

[2] Further, when answering, we assume that payment of the employee’s travel costs to work and back is an integral part of the remuneration system and is provided for in the employment contract.

[3] Review of the practice of courts considering cases related to the application of Chapter 23 of the Tax Code of the Russian Federation (approved by the Presidium of the Supreme Court of the Russian Federation on October 21, 2015).

Answers to the most interesting questions on our telegram channel knk_audit
Back to section

The employee was paid for travel to a vacation spot outside the Russian Federation

If the employer compensates the employee for air travel to and from the place of rest on the basis of legislative acts (for example, Article 325 of the Labor Code of the Russian Federation, Decree of the Government of the Russian Federation “On compensation for travel on vacation and back for employees of government agencies” dated June 12, 2008 No. 455), and the place of rest is located outside the Russian Federation, then only the paid route from the employee’s home to the airport of departure abroad is not subject to insurance premiums and personal income tax.

The judges came to this conclusion. In a judicial precedent, the Pension Fund and the interdistrict Federal Tax Service of the Magadan Region clashed. The tax office paid for a non-stop flight for its employees on a foreign vacation trip, and determined the amount not subject to contribution by calculation as part of the journey to the Russian border.

During the audit, the Pension Fund did not agree with this and assessed additional tax contributions on the entire cost of air tickets. According to the inspectors, the “border of the Russian Federation” in the case of paying for air tickets should not be understood as a “physical” border on the ground, but the place where the passenger crosses the border of the Russian Federation formally: passport control at the airport.

The case went through several authorities. The scales tipped either in favor of the Pension Fund or in favor of the Federal Tax Service. The Arbitration Court of the Far Eastern District put an end to it by Resolution No. F03-5357/2018 dated December 27, 2018. The arbitration judges fully supported the Pension Fund, pointing out that:

In case of going on vacation outside the Russian Federation, only the cost of travel to the checkpoint across the state border of the Russian Federation is not subject to insurance premiums. In the case of air travel, such a point is the airport where the passenger receives a stamp of release from the Russian Federation.
In the case of purchasing tickets for international flights for vacation workers (in accordance with any regulatory legal acts), the cost of such tickets should be fully subject to insurance premiums. The only tax exemption is the cost of transporting employees to the airport from which an international flight departs. This statement is also true for the return journey. The airport will also be the point of crossing the Russian border.

What about personal income tax on airline ticket compensation?

There is no clear decision yet regarding personal income tax on the cost of air tickets for a vacation outside the Russian Federation. In the list of payments exempt from personal income tax in Art. 217 of the Tax Code of the Russian Federation does not specifically mention compensation for travel on vacation. According to the Ministry of Finance, which was supported by the Supreme Court of the Russian Federation, these compensations relate to those specified in Art. 217 compensations based on legal acts. That is, they are exempt from personal income tax.

Based on this, the Ministry of Finance issued several letters (for example, dated December 29, 2012 No. 03-04-06/6-375, dated November 3, 2010 No. 03-04-06/6-263), in which it suggested whenever traveling abroad obtain from the carrier a certificate about the cost of transporting a passenger-employee across the territory of the Russian Federation. And based on this certificate, calculate the personal income tax-free amount of compensation for tickets.

However, the letters of the Ministry of Finance, firstly, are not normative acts, and secondly, the above-mentioned letters appeared earlier than the court decision we have already considered. Therefore, it is quite possible that the position of officials on this issue will change in the near future, and they will come to the conclusion that the cost of an employee’s flight on vacation abroad is subject to personal income tax in full from the moment the passenger passes through passport control at the airport of departure abroad.

The amount of travel compensation for a new employee is not subject to personal income tax.

Amounts of compensation to an employee for expenses associated with moving to work in another area are not subject to personal income tax in the amounts established by agreement of the parties to the employment contract
09/22/2017 Author: Expert of the Legal Consulting Service GARANT auditor Ovchinnikova Svetlana
In a commercial organization, to attract young promising employees, a Regulation on payment is being developed lifts for young specialists arriving at their place of work from other cities. In accordance with the Regulations, a young specialist is recognized as a specialist who is getting a job for the first time; his age is not older than 28 years. When issuing allowances, an additional agreement to the employment contract is concluded with the employee with the condition of working in the organization for at least 5 years; in case of dismissal at his own request, the employee is obliged to return the amount of paid allowances. 2 payment options are being considered:

1. A newly hired young specialist, upon personal application and after concluding an additional agreement, receives an advance in the amount of 100 thousand rubles. Within a month, the obligation arises to provide a report with the attachment of primary documents confirming payment of actual expenses. In this case, expenses may be associated with reimbursement of expenses for travel documents, rental housing, purchase of necessary items and furniture for arrangement in a new place (including furniture, dishes, household appliances). In case of voluntary dismissal before the expiration of 5 years, the employee becomes obligated to return the amounts received in full.

2. A newly hired young specialist, upon personal application and after concluding an additional agreement, receives 100 thousand rubles. — one-time compensation in connection with moving to another location. With this option, the employee does not have the obligation to confirm actual expenses. In case of voluntary dismissal before the expiration of 5 years, the employee becomes obligated to return the amounts received in full.

What is the taxation procedure in these situations in terms of accepting such expenses for profit tax purposes, personal income tax and insurance premiums? What are the tax risks arising from such payments?

Having considered the issue, we came to the following conclusion:

1. Taking into account judicial practice, the amount of compensation for travel and accommodation of a newly hired specialist, as well as compensation for the cost of renting housing may not be subject to personal income tax.

According to the current official position, the amount of compensation for travel and accommodation for newly hired specialists who have moved from other cities should be subject to personal income tax.

The amount of compensation to an employee for rental housing expenses, according to the Russian Ministry of Finance, is subject to personal income tax (even if reimbursement of such expenses is provided for in the employment contract).

2. We have not found any official explanations or judicial practice on the issue of taxation of the costs under consideration by insurance premiums in the light of the norms of Chapter 34 of the Tax Code of the Russian Federation.

If we adhere to the position that the organization’s expenses for reimbursement of the costs in question should be considered as compensation (guarantees) provided for in Art. 169 of the Labor Code of the Russian Federation, these payments are not subject to insurance premiums on the basis of paragraphs. 2 p. 1 art. 422 of the Tax Code of the Russian Federation.

However, taking into account the official position on the previous paragraph, it is impossible to exclude the possibility of tax risks if insurance premiums are not applied to the expected payments to newly hired young specialists (for any option of formalizing the relationship).

3. In the situation under consideration, it seems to us that the more “risk-free” option for profit tax purposes is to take into account the amounts of compensation to new employees for relocation and settlement expenses under clause 25 of Art. 255 Tax Code of the Russian Federation.

An organization's expenses for paying compensation for rental housing can be taken into account for profit tax purposes as other expenses associated with production and (or) sales (clause 49, clause 1, article 264 of the Tax Code of the Russian Federation), subject to the general requirements of clause 1 Art. 252 of the Tax Code of the Russian Federation.

Rationale for the conclusion:

The concept of lifting is not defined by labor and tax legislation.

According to Art. 169 of the Labor Code of the Russian Federation, when an employee moves, by prior agreement with the employer, to work in another area, the employer is obliged to reimburse the employee:

— expenses for moving the employee, his family members and transporting property (except for cases where the employer provides the employee with appropriate means of transportation);

- expenses for settling into a new place of residence.

Commercial organizations establish the procedure and amount of reimbursement to employees for expenses when moving to work in another area by a collective agreement or local regulation, or by agreement of the parties to the employment contract.

According to the Ministry of Finance of Russia (see, for example, letters dated July 20, 2007 N 03-04-06-01/255, dated May 22, 2007 N 03-04-06-01/152, dated January 17, 2006 N 03-03-04 /1/30), for tax purposes, lifting should be understood as the types of compensation established by Art. 169 Labor Code of the Russian Federation.

At the same time, some judges note that when applying the provisions of Art. 169 of the Labor Code of the Russian Federation, it is necessary to take into account that the provisions of this article apply in the case when an employee, in agreement with the employer, moves from one place of work where he performed his job duties to another place of work with the same employer (see, for example, the appeal ruling of the IC in civil cases of the Transbaikal Regional Court dated May 25, 2016 in case No. 33-2283/2016).

At the same time, we note that Rostrud specialists, in responses to private inquiries, indicate that the provisions of Art. 169 of the Labor Code of the Russian Federation are also applied when concluding an employment contract with an employer located in another area.

Based on Art. 57 of the Labor Code of the Russian Federation, an employment contract may provide for additional conditions that do not worsen the employee’s position in comparison with established labor legislation and other regulatory legal acts containing labor law norms, a collective agreement, agreements, and local regulations.

In this situation, the organization plans to pay newly hired employees the following funds:

- as compensation for actual (documented) expenses for travel to a new place of work, for renting housing, for settling into a new place of residence;

- or as compensation for the employee’s expenses associated with moving to a new place of residence and settling down there in a certain amount without documentary evidence of the fact of incurring expenses.

Personal income tax

For personal income tax purposes, the concept of “income” is defined in accordance with the provisions of paragraph 1 of Art. 41 of the Tax Code of the Russian Federation, according to which income is recognized as economic benefit in monetary or in-kind form, taken into account if it is possible to evaluate it and to the extent that such benefit can be assessed, and determined in accordance with Chapter 23 of the Tax Code of the Russian Federation.

As a general rule, income received by an individual from sources in the Russian Federation in kind or in cash is recognized as an object of personal income tax taxation (Articles 208-210 of the Tax Code of the Russian Federation). As follows from the provisions of paragraph 1 of Art. 208 of the Tax Code of the Russian Federation, income from sources in the Russian Federation includes any income received by the taxpayer as a result of his activities in the Russian Federation.

At the same time, Art. 217 of the Tax Code of the Russian Federation establishes a list of income that is not subject to taxation.

So, in accordance with paragraph 3 of Art. 217 of the Tax Code of the Russian Federation are not subject to taxation (exempt from personal income tax) all types of compensation payments established by the current legislation of the Russian Federation, legislative acts of constituent entities of the Russian Federation, decisions of representative bodies of local self-government (within the limits of legally established norms), related, in particular, to the performance of labor duties by the taxpayer ( including moving to work in another area).

According to the explanations of specialists from the Ministry of Finance of Russia, amounts reimbursed to an employee for expenses associated with moving to work in another area (travel and accommodation expenses) are not subject to personal income tax in the amounts established by agreement of the parties to the employment contract. Such clarifications are given, for example, in relation to situations where:

- the employer transfers some of the employees from one separate division to another separate division located in another city (letters of the Ministry of Finance of Russia dated May 15, 2013 N 03-03-06/1/16789, dated December 17, 2008 N 03-03-06/1/ 688);

- the employee is sent to permanent work abroad (letter of the Ministry of Finance of Russia dated April 18, 2007 N 03-04-06-01/123);

- the employer attracts new employees of other organizations from other regions of Russia (letters of the Ministry of Finance of Russia dated December 17, 2008 N 03-03-06/1/688, dated May 26, 2008 N 03-04-06-01/140, dated May 30, 2007 N 03-04-06-01/165).

From the above letters it follows that the Russian Ministry of Finance allowed the possibility of applying clause 3 of Art. 217 of the Tax Code of the Russian Federation when paying reimbursement of expenses provided for in Art. 169 of the Labor Code of the Russian Federation, both in cases of transfer of existing employees to work in another area, and in cases of attracting new nonresident workers.

However, later the position of the Russian Ministry of Finance changed. Thus, in the letter dated July 14, 2009 N 03-03-06/2/140 it is explained that the provisions of Art. 169 of the Labor Code of the Russian Federation are applied in the case when an employee, in agreement with the employer, moves from one place of work where he performed his job duties to another place of work. At the time of moving to work in another locality, an individual must be in an employment relationship with the same employer, by agreement with which he is moving from one place of work with this employer to another place of work located in another locality. In the case of hiring a new employee and paying for travel to his place of work specified in the employment contract, as well as expenses for settling into a new place of residence, the provisions of Art. 169 of the Labor Code of the Russian Federation is unfounded. In this regard, amounts paid by the organization for these employee expenses are subject to personal income tax in the prescribed manner.

In relatively recent letters from the Ministry of Finance of Russia dated 08/05/2014 N 03-04-06/38542, dated 06/30/2014 N 03-04-06/31385, a similar point of view is expressed.

Since the new employer reimburses the employee for his expenses for moving to a new place of work, Art. 169 of the Labor Code of the Russian Federation is not provided for; this payment is not subject to clause 3 of Art. 217 Tax Code of the Russian Federation. In this case, the method of payment (reimbursement) by the employer for such expenses does not matter.

Thus, at the moment, representatives of the financial department believe that in the case where the costs of moving and settling an employee are compensated by a new employer, such compensation is not considered made on the basis of Art. 169 of the Labor Code of the Russian Federation (in particular, the Trans-Baikal Regional Court agreed with this, as we have already mentioned above).

In addition, officials draw attention to the fact that the amount of reimbursement of an employee’s expenses for settling into a new place of residence and the cost of travel for the employee and his family members (carriage of luggage) are exempt from personal income tax if there are appropriate supporting documents, provided that such reimbursement is made in accordance with Art. 169 of the Labor Code of the Russian Federation (letters of the Ministry of Finance of Russia dated March 17, 2017 N 03-04-06/15550, dated November 3, 2016 N 03-04-06/64782, dated November 18, 2014 N 03-04-06/58173).

At the same time, there are court decisions that do not support the official point of view.

Thus, in the decision of the Thirteenth Arbitration Court of Appeal dated November 1, 2011 No. 13AP-16522/11, the tax inspectorate’s argument about the impossibility of applying the provisions of Art. 169 of the Labor Code of the Russian Federation and clause 3 of Art. 217 of the Tax Code of the Russian Federation due to the fact that before moving to the location of the company the employees were not in an employment relationship with the organization, the court rejected it. The court came to the conclusion that the company fulfilled all the provisions provided for in Art. 169 of the Labor Code of the Russian Federation conditions, namely: a preliminary agreement has been reached with employees on reimbursement of disputed expenses, employment contracts stipulate the specific amounts of this reimbursement, and the reimbursement itself was made during the period when the employees were in an employment relationship with the company. The Federal Tax Service's reference to the fact that none of the employees documented that the funds received were used specifically for arrangement at a new place of residence was also rejected by the judges, since the current legislation does not provide for the need for employees to submit reports on the expenditure of disputed compensation.

A similar conclusion is contained in the resolution of the Ninth Arbitration Court of Appeal dated 04/19/2011 N 09AP-6466/11. In particular, the court indicated that, on the basis of Art. 169 of the Labor Code of the Russian Federation, an employee is reimbursed for the costs of settling into a new place of residence in all cases when, in order to fulfill his work duties, he has to change his previous place of residence.

A decision was made in favor of the taxpayer in the resolution of the Federal Antimonopoly Service of the Far Eastern District dated February 22, 2012 N F03-417/12 in case N A51-9827/2011.

At the same time, for example, in the resolution of the Federal Antimonopoly Service of the Far Eastern District dated April 20, 2005 N F03-A73/05-2/461, the court indicated that reimbursement of expenses for moving to a place of work is recognized as compensation in the presence of an employment relationship.

With regard to reimbursement of expenses for rental housing, it should be noted that Art. 169 of the Labor Code of the Russian Federation does not provide for this type of compensation.

In this regard, the Ministry of Finance of Russia has repeatedly indicated that the amount of reimbursement by the organization of expenses for hiring housing for employees who moved to work in another area does not fall under clause 3 of Art. 217 of the Tax Code of the Russian Federation (this norm provides for exemption from taxation of compensation amounts only in relation to relocation). Therefore, the amounts in question are subject to personal income tax (even if reimbursement of such expenses is provided for in the employment contract). See letters of the Ministry of Finance of Russia dated 03/17/2017 N 03-04-06/15550, dated 06/14/2016 N 03-03-06/1/34531, dated 12/07/2015 N 03-04-06/71288, dated 09/19/2014 N 03-04-06/46997, dated 05/15/2013 N 03-03-06/1/16789, dated 02/13/2012 N 03-04-06/6-35, dated 07/13/2009 N 03-04-06-01 /165, dated 06/11/2008 N 03-04-06-02/57, dated 01/25/2008 N 03-04-06-01/22.

At the same time, the judges take the opposite point of view, considering that the rental of living quarters for employees from another locality is an integral part of the arrangement at a new place of residence, and therefore, payment for rent falls under the concept of compensation provided for in Art. 169 of the Labor Code of the Russian Federation, and is not subject to personal income tax (see, for example, resolutions of the AS of the North-Western District dated 08/28/2014 N F07-6326/14, FAS of the East Siberian District dated 09/11/2013 N F02-4189/13 in case N A19- 2330/2013, Fourth Arbitration Court of Appeal dated July 3, 2013 N 04AP-2233/13, FAS Volga District dated November 15, 2011 N F06-9891/11, FAS Moscow dated March 21, 2011 N KA-A40/1449-11, dated 06.09 .2007 N KA-A40/9054-07, FAS Volga-Vyatka District dated June 24, 2008 N A43-28282/2007-37-943).

The Presidium of the Supreme Court of the Russian Federation in paragraph 3 of the Review dated October 21, 2015 summarized the judicial practice on this issue and came to the conclusion that the receipt by an individual of benefits in the form of goods (work, services) paid for him and property rights is not subject to personal income tax if the provision of such benefits is determined, first of all, by the interest of the person transferring (paying for) them, and not by the goal of primarily satisfying the personal needs of the citizen. The mere fact that as a result of providing a citizen with the benefits paid for him, the personal needs of the individual are satisfied to a certain extent, is not sufficient to conclude that taxable income in kind has arisen.

Thus, taking into account judicial practice, the amount of compensation for travel and accommodation for newly hired specialists, as well as compensation for expenses for renting housing, may not be subject to personal income tax on the basis of Art. 169 of the Tax Code of the Russian Federation and clause 3 of Art. 217 Tax Code of the Russian Federation.

However, following such a legal approach is likely to cause disagreements with inspectors. In this case, the organization must be prepared to defend its position in court.

We also believe that the absence of documents confirming the fact that the employee has incurred reimbursable expenses in the second option of payment of compensation increases the risks of additional claims from inspectors (as we mentioned above, the Russian Ministry of Finance insists on the availability of these documents).

For your information:

If an employee is dismissed before the expiration of the established period and such employee returns to the organization the entire amount of money received, the employee will have income in the form of material benefits from savings on interest for the use of borrowed (credit) funds, provided for in paragraphs. 1 clause 1 art. 212 of the Tax Code of the Russian Federation (letter of the Ministry of Finance of Russia dated December 17, 2008 N 03-03-06/1/688).

Insurance premiums

Since 01.01.2017, relations related to the calculation and payment of insurance premiums are regulated by the provisions of Chapter 34 of the Tax Code of the Russian Federation (Clause 8, Article 2, Part 1, Article 5 of the Federal Law of 07/03/2016 N 243-FZ).

The object of taxation with insurance contributions for organizations are payments and other remuneration in favor of individuals subject to compulsory social insurance in accordance with federal laws on specific types of compulsory social insurance, in particular, within the framework of labor relations (clause 1 of Article 420 of the Tax Code of the Russian Federation).

The base for calculating insurance premiums is determined at the end of each calendar month as the amount of payments and other remunerations provided for in paragraph 1 of Art. 420 of the Tax Code of the Russian Federation and accrued separately in relation to each individual from the beginning of the billing period on an accrual basis, with the exception of the amounts specified in Art. 422 of the Tax Code of the Russian Federation (clause 1 of Article 421 of the Tax Code of the Russian Federation).

According to paragraphs. 2 p. 1 art. 422 of the Tax Code of the Russian Federation are not subject to insurance premiums for all types of compensation payments established by the legislation of the Russian Federation, legislative acts of the constituent entities of the Russian Federation, decisions of representative bodies of local self-government (within the limits of the norms established in accordance with the legislation of the Russian Federation), related, in particular, to the performance of labor duties by an individual , including in connection with moving to work in another area.

Note that a similar rule is provided for in paragraphs. 2 p. 1 art. 20.2 of the Federal Law of July 24, 1998 N 125-FZ “On compulsory social insurance against industrial accidents and occupational diseases.”

Unfortunately, we were not able to find any official explanations regarding the imposition of insurance premiums on the amount of compensation to a newly hired employee for his travel expenses to a new place of work (location of the organization) and for settling into a new place.

An argument in this situation can, in our opinion, be the fact that the expenses of a newly hired employee for relocation and arrangement are subject to reimbursement already during the validity period of the employment contract concluded with him, in turn, reimbursement of such amounts is provided for in an additional agreement to the employment contract.

However, we cannot exclude the possibility that tax authorities will take a different point of view on this issue.

The employer’s obligation to pay housing rental compensation to newly hired non-residents (as we noted above) is not directly established by Art. 169 Labor Code of the Russian Federation. Since such compensation is not mentioned among the amounts not subject to insurance contributions, we believe that there are direct grounds for applying the provisions of Art. 422 of the Tax Code of the Russian Federation does not apply to the amounts of these compensations.

On the issue of taxation of insurance premiums on the amounts reimbursed by an organization for the costs of hiring housing for employees, representatives of official bodies (during the period of validity of the Federal Law of July 24, 2009 N 212-FZ “On insurance contributions to the Pension Fund of the Russian Federation, the Social Insurance Fund of the Russian Federation, the Federal Compulsory Medical Fund Insurance" (hereinafter referred to as Law N 212-FZ)) explained that such payments are subject to insurance premiums, since they are of an incentive nature and are not designated as not subject to insurance premiums in Art. 9 of Law N 212-FZ (see, for example, letters of the Ministry of Labor of Russia dated May 19, 2016 N 17-3/B-199, Social Insurance Fund of the Russian Federation dated November 17, 2011 N 14-03-11/08-13985, paragraph 3 of the letter Ministry of Health and Social Development of Russia dated 05.08.2010 N 2519-19)*(2).

At the same time, court decisions that considered disputes relating to the period of validity of Law N 212-FZ show that judges do not share the official point of view.

For example, in the ruling of the RF Armed Forces dated 02.26.2016 N 310-KG15-20212, in the IC rulings on economic disputes of the RF Armed Forces dated 09.22.2015 N 304-KG15-5000, dated 09.16.2015 N 304-KG15-5008 it is stated that established on on the basis of a local act of the organization, the disputed compensation payments are of a social nature and, despite the fact that they were made in connection with the existence of labor relations, do not have signs of wages in the sense of Art. 129 of the Labor Code of the Russian Federation, since they are not remuneration (remuneration for labor), do not relate to incentive payments, do not depend on the qualifications of the employee, the complexity, quality, quantity and conditions of the work performed by this employee. These payments are not made as part of an employment relationship. The fact of the existence of an employment relationship between the employer and his employees does not in itself indicate that all payments accrued to employees represent payment for their labor. Thus, the disputed payments fall within the scope of paragraphs. “and” clause 2, part 1, art. 9 of Law N 212-FZ and are not subject to inclusion in the base subject to insurance contributions.

See additionally the decisions of the Eighth Arbitration Court of Appeal dated July 5, 2016 N 08AP-6318/16, AS of the Volga-Vyatka District dated September 30, 2014 N F01-3938/14 in case N A43-23628/2013, the Twelfth Arbitration Court of Appeal dated September 17, 2014 N 12AP-8012/14.

With regard to the application of the norms of Chapter 34 of the Tax Code of the Russian Federation, due to their short validity, law enforcement practice has not yet been formed.

Taking into account the above, we believe that if in the case under consideration insurance premiums are not imposed on payments to newly hired young specialists (for any option of formalizing the relationship), there is a possibility of tax risks arising.

An organization can exercise the right of a taxpayer and apply on this issue to the Ministry of Finance of Russia or the tax authority at the place of its registration for appropriate written explanations.

Based on paragraph 1 of Art. 34.2 of the Tax Code of the Russian Federation, the financial body authorized to give explanations on the application of the legislation of the Russian Federation on insurance premiums, since 01.01.2017, is the Ministry of Finance of Russia. In turn, payers of insurance premiums have the right to contact the Ministry of Finance of Russia or the tax authority at the place of their registration for personal written explanations on the application of the legislation of the Russian Federation on taxes and fees (subparagraphs 1, 2, paragraph 1, paragraph 3 of Art. 21 of the Tax Code of the Russian Federation).

Income tax

According to paragraph 1 of Art. 252 of the Tax Code of the Russian Federation, for the purpose of taxation of profits, the taxpayer has the right to reduce the income received by the amount of expenses incurred (with the exception of expenses specified in Article 270 of the Tax Code of the Russian Federation), provided that such expenses are economically justified, documented and incurred to carry out activities aimed at generating income .

In accordance with paragraph 2 of Art. 252 of the Tax Code of the Russian Federation, expenses, depending on their nature, as well as the conditions for implementation and areas of activity of the taxpayer, are divided into expenses associated with production and sales (Article 253 of the Tax Code of the Russian Federation), and non-operating expenses (Article 265 of the Tax Code of the Russian Federation).

By virtue of paragraphs. 5 p. 1 art. 264 of the Tax Code of the Russian Federation, other expenses associated with production and sales include the taxpayer’s expenses in the form of amounts of paid allowances within the limits established in accordance with the legislation of the Russian Federation.

As already mentioned, allowances, according to the Russian Ministry of Finance, are the amounts of expenses reimbursed to employees in the manner provided for in Art. 169 Labor Code of the Russian Federation.

It is in this meaning that this concept was interpreted in the letter of the Ministry of Finance of Russia dated December 17, 2008 N 03-03-06/1/688, in which, with reference to paragraphs. 5 p. 1 art. 264 of the Tax Code of the Russian Federation states that the costs of reimbursing expenses to employees associated with their move to work in another area, for tax purposes of the organization’s profit, can be taken into account as part of other expenses associated with production and sales, within the limits determined by the parties to the employment contract, and provided that these expenses comply with the provisions of paragraph 1 of Art. 252 of the Tax Code of the Russian Federation. Please note that this letter also addressed newly hired employees.

Subsequently (as we have already noted) the Russian Ministry of Finance applied the provisions of Art. 169 of the Labor Code of the Russian Federation in relation to reimbursement of expenses for moving a newly hired employee to a new place of work was considered unfounded. Currently, the Ministry of Finance of Russia in its letters, speaking about the possibility of taking into account amounts of paid allowances for profit tax purposes, emphasizes that these amounts should be provided for in Art. 169 of the Labor Code of the Russian Federation (see, for example, letter of the Ministry of Finance of Russia dated November 3, 2016 N 03-04-06/64782).

At the same time, taking into account the provisions of Art. 255 of the Tax Code of the Russian Federation as a whole, employees of the financial department considered it possible to take into account, for the purposes of Chapter 25 of the Tax Code of the Russian Federation, expenses associated with the relocation of newly hired employees on the basis of the norm of paragraph 25 of Art. 255 Tax Code of the Russian Federation.

Such clarifications are presented, in particular, in letters of the Ministry of Finance of Russia dated November 23, 2011 N 03-03-06/1/773, dated July 23, 2009 N 03-03-05/138, dated July 14, 2009 N 03-03-06/ 2/140.

Let us recall that by virtue of clause 25 of Art. 255 of the Tax Code of the Russian Federation, for tax purposes, “other types of expenses incurred in favor of the employee, stipulated by the employment contract and (or) collective agreement” are taken into account.

Accordingly, it can be assumed that the tax authorities will be guided by precisely this position of the financial department.

Therefore, in the situation under consideration, we think it is more “risk-free” for profit tax purposes to take into account the amounts of compensation to new employees in the organization’s expenses under clause 25 of Art. 255 Tax Code of the Russian Federation.

At the same time, the absence of confirmation of the employee’s expenses in the second option of paying a lump sum compensation provides the tax authority with the opportunity to classify these expenses as not supported by documents. In other words, the presence in the additional agreement to the employment contract only of the phrase “one-time compensation in connection with moving to another location” does not reveal what was actually compensated.

Regarding the issue of accounting for the costs of reimbursing an employee’s expenses for renting residential premises, we report the following.

In a number of letters, the Ministry of Finance of Russia noted that compensation for an employee’s expenses for hiring residential premises cannot be taken into account for corporate profit tax purposes as part of other expenses related to production and (or) sales, since the employee’s expenses related to meeting his social and economic needs , cannot be considered as carried out within the framework of the activities of the organization itself. These payments can only be made as part of the remuneration system adopted in the organization (payment in kind). See letters of the Ministry of Finance of Russia dated November 21, 2016 N 03-03-06/1/68362, dated November 14, 2016 N 03-03-06/1/66710, dated December 7, 2015 N 03-03-06/1/71238.

And in the letter of the Ministry of Finance of Russia dated June 14, 2016 N 03-03-06/1/34531, officials, referring to clause 29 of Art. 270 of the Tax Code of the Russian Federation, came to the conclusion that the amount of reimbursement by an organization of expenses for renting an apartment for an employee who moved to work in another area is of a social nature and such expenses cannot be taken into account when calculating the tax base for corporate income tax, regardless of whether these are provided for expenses due to employment contracts or not.

Chapter 25 of the Tax Code of the Russian Federation does not contain a closed list of specific expenses of the taxpayer that can be taken into account when calculating the tax base for income tax (see also the definition of the Constitutional Court of the Russian Federation dated June 4, 2007 N 320-O-P).

The organization's expenses for the payment of such compensation can be taken into account for profit tax purposes as other expenses associated with production and (or) sales (clause 49, clause 1, article 264 of the Tax Code of the Russian Federation), subject to the general requirements of clause 1, art. 252 of the Tax Code of the Russian Federation, namely economic justification, documentary evidence of such costs and their incurrence within the framework of activities aimed at generating income.

We believe that, subject to proper documentary confirmation of the requirements of paragraph 1 of Art. 252 of the Tax Code of the Russian Federation in relation to compensation for an employee for renting housing in the locality where he performs his labor function, can be considered fulfilled if the attraction of out-of-town workers is associated with the lack of qualified specialists among local residents, which can be confirmed by a certificate from the employment service institution, documentary evidence of placement by the employer vacancies in local media, etc.

At the same time, the possibility of tax risks arising when recognizing in tax accounting the costs of reimbursing employees for rental housing costs cannot be excluded.

GUARANTEE

Post: