Benefits in kind
Benefits in kind mean benefits other than cash which the employee receives from the employer on the basis of an employment relationship. Benefits are determined by a Tax Administration decision.
Benefits received on the basis of a public-service employment or employment relationship are included in the employee’s taxable income. Each year, the Tax Administration issues a decision on the value of benefits in kind and on the basis for their calculation. The tax value of an employer-subsidised commuter ticket is determined under section 64 of the Income Tax Act (1535/1992). Ordinary and reasonable employee benefits referred to in section 69 of the Act are not taxable income.
There are no specific guidelines for government agencies on employee meals. Government agencies may decide on the matter in their human resources policy. Government agencies must try to provide their employees with an opportunity to have affordable meals during working hours. The setting may be a staff restaurant used by one or more organisations, a refectory serving employees, students and customers or a contract with a local restaurant. The most suitable option depends on the location of the workplace and the working hours. The government agency may subsidy employee meals, for example by contributing towards the cost of premises for a staff restaurant or by agreeing on a direct meal subsidy with the restaurant.
As double subsidies for employee meals should be avoided, it is not advisable to provide employee lunch vouchers, which are a taxable food and meal benefit. However, if the government agency decides to introduce vouchers, there should always be a justified reason for this, for example due to the location of the workplace or exceptional working hours.
A mobile phone may be issued to a public official or employee as a benefit in kind if their duties so require. In this case, the nature of the work is such that the public official or employee is required to be available outside the place of employment and office hours more than would normally be expected. The government agency is responsible for purchasing the phone and the costs arising from it.
Government agencies should exercise restraint when providing car benefits. A car benefit must primarily be based on the need to carry out official duties.
Government vehicles are intended for official use. With regard to senior government officials, the Ministry of Finance has issued a decision on the use of official cars as a benefit in kind (Ministry of Finance Decision, 29 May 2001, VM 12/329/2001 PDF, in Finnish).
Living accommodation benefit
Some government agencies (such as the Finnish Defence Forces and the Border Guard) have made available rental accommodation for their employees. With regard to the central government, there are no specific regulations or guidelines on employee living accommodation benefits. Employees rent such accommodation under the Act on Residential Leases (481/1995), as applicable, and subject to the government agencies' internal instructions.
If the rent is lower than the current market level, the tenant is considered to receive a living accommodation benefit. This benefit is added to pay and tax is paid on it. If the benefit is not included in pay, the central government agency usually aims to set the rent at the level of local
non-subsidised rental apartments so as to avoid the provision of a taxable living accommodation benefit.
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