Tax News:

Home office and the tax regime of related compensation in light of the new coordination committee

09 January 2020

Monika Lodrová, Senior Manager, Head of Personal Income Tax |

Some time ago we informed you that the Coordination Committee of the Chamber of Tax Advisors is discussing the tax regime for home office. What are the results of its deliberations and what do they mean for you?

Employee expenses related to home office may include compensation for wear and tear on own property or other costs. If similar compensations can be made subject to compulsory compensation, they usually enjoy a more favourable tax regime

In general, the employer is obliged to fully reimburse the employee for costs incurred in connection with the performance of the work. At the same time, it is possible for the employer and the employee to agree to work from home. The employer's consent to the home office and the use of their own facilities then makes the claim for compensation possible.

The government stresses that compensation should not be a special-purpose reclassification of wage funds into non-taxable items. Therefore, we recommend making any adjustments to the remuneration structure and compensation of employees with a clear economic purpose. Furthermore, by their very nature, compensation should not lead to employees' property benefits.

Compensation for wear and tear of own property (computer, office furniture, etc.) is payable to the employee, provided that it is proven by the employee. The provability can then be simplified administratively by using flat-rate compensation. Its determination should be demonstrably made by the employer based on actual expenditures. According to the state administration, the flat rate cannot be determined by an expert opinion.

In the opinion of the state administration, compensation of other costs (internet, energy, cleaning, etc.) cannot be flat-rate. These must be specifically documented costs.

The amount of compensation should then always be determined using economically justifiable and documentable criteria (degree of use for business purposes, area, etc.).

Employees working from home are entitled to a subsistence allowance under similar conditions as other employees, provided that the shift and its duration can be determined in the present case.

Regarding the tax deductibility of the relevant items at the employer, legal claims are usually tax deductible costs.

Performance above and beyond the statutory obligations may, of course, be provided by the employer, but these will usually be taxable. This will significantly increase the associated costs. In any case, we recommend that employees' claims and the method of their calculation be modified in binding labour-law documents.