"The compensation can be included to the income tax expenses when, under the terms of employment contract, compensation is a payment for labor"
The clarification letter of the Tax Service concerns the calculation of personal income tax, insurance fees, and income tax when the employee is compensated for the housing fee in accordance with the local act and the employment contract.
It is not necessary to apply personal income tax if the compensation of housing expenses is in the interests of the employer. This point of view is based on the approach of the Supreme Court of Russia.
In the clarification letter of the Tax Service the wording "exclusively in the interests" is used, and the Supreme Court states - "primarily in the interests". We believe that neither one nor the other does not matter since it is impossible to exclude the interest of the employee or to confirm the priority of the employer's interests. The main point - to justify that the company pursued its benefits.
Insurance fees will have to pay, the Tax service believes.
It should be noted that the Supreme Court indicated that it is not necessary to pay if the compensation is of a social nature: it is not a payment for labor, it does not depend on the qualification of the employee, the results and the conditions of work.
The compensation can also be included when into the income tax expense, in the case under the terms of the employment contract, compensation is a payment for labor.
It should be also noted that the Ministry of Finance considers such payment by as a salary. Therefore, tax inspectors and auditors may have questions if the compensation exceeds 20% of the salary.
