In-Kind Benefits (Fringe Benefits) 2012

These benefits refer to earnings, usually from employment, other than in cash, as part of compensation for work (examples: free or subsidized meals, accommodation, company car, etc.), which are a portion of employment income. 

The value of benefits received from an employer is included in the employee´s taxable income.  The valuation of benefits in kind varies year to year because of differences in costs to employer, market value, etc.

Decision 765/32/2011 of the Finnish Tax Administration on the valuation of taxable in-kind benefits to be applied in 2012.

Under § 64 and § 76 of the Income Tax Act (1535/1992) of 30 Dec 1992, as § 64.1 and § 76, subsection 1.5 stand in the Act (504/2010), the Finnish Tax Administration has prescribed the following:

§ 1

Any benefits in kind (fringe benefits), received from an employer in Finland or other countries, shall be assessed on the following bases:

Accommodation and the use of electric power

§ 2

The tax values of employer-provided accommodation that includes heating, in dwellings with central heating, are as follows:

(a)  Helsinki metropolitan area, (Helsinki, Espoo, Kauniainen, Vantaa):

(b)  Other parts of Finland:

By way of derogation from paragraph 1, the tax value of accommodation in a dwelling referred to in the Act on the Use, Assignment and Redemption of State-Subsidized Rental Dwellings and Buildings (1190/1993 Arava) should not exceed the amount of rent charged for the dwelling.

The value of the benefit received in a foreign country under § 76, subparagraph 1.5, of the Income Tax Act (504/2010), equals the current rent of the dwelling, but not more than 50 per cent of the current taxable benefit value of a dwelling referred to in paragraph 1, located in the Helsinki metropolitan area and completed 1984 or later.

If a travel agent or travel service employee, pursuant to a clause in his employment contract to that effect, is prepared to relocate as necessary, and during work in a foreign country, the employer requires that the employee change his/her accommodation and location of work, the valuation of the benefit arising from employer-provided accommodation shall be based on a dwelling size of 25sq.m.

§ 3

For the purposes of this Decision, the year of completion of a dwelling is the year in which the construction work of the building was completed.  If the entire building has later been fully renovated, the year of renovation is regarded as the year of completion.

§ 4

If the employee himself pays for heating in a centrally-heated dwelling, the value referred to in § 2 is reduced by €1.17 per square metre and month.

§ 5

In a stove-heated dwelling, the value of accommodation with heating is €3.77 per square metre and month.  If the employee himself pays for the heating, the value is €2.57 per square metre and month.  

§ 6

When the employer provides unlimited use of electric power to the employee in addition to accommodation, it is valuated as €0.76 per square metre and month. This value does not include electric heating.

For purposes of valuation, accommodation with electric heating is equated with accommodation with central heating. 

§ 7

The value of accommodation in a shared room, including heating and lighting, is €112.00 per month in a room with central heating.  The value of accommodation in a stove-heated room is €40.00 per month.

§ 8

For purposes of valuation, the floor area is deemed to comprise not only the actual living space but also the facilities used by the employee or his family, such as a sauna, a swimming pool and a hobby room. Nevertheless, a garage is not included in the floor area.

Furthermore, for dwelling units completed before 1961, the floor area exceeding 150 square metres is valuated only as one-half of its actual square metres as defined in the previous paragraph 1. 

§ 9

If the competent authority has established that the level of housing rents in a particular municipality is lower than the taxable benefit values given above in § 2, paragraph 1, a general reduction in the values can be made in that municipality, but not for more than 20 per cent.

Correspondingly, because of location within a municipality, the values above in § 2, paragraph 1, or as amended under paragraph 1 of the present section, can be reduced, but not by more than 20 per cent.

Garage
§ 10

The value of a heated garage or an indoor space in a parking structure is €68.00 per month in the Helsinki metropolitan area and €44.00 elsewhere in Finland.  An unheated garage or indoor parking space is valued at €44.00 per month in the metropolitan area and at €35.00 per month elsewhere in Finland. 

Meals
§ 11

Employer-provided meals are valued at €5.60 per meal if the employer´s direct costs including VAT for providing this benefit are at least €5.60 but not more than €9.30.  If direct costs including VAT are less than €5.40 or more than €9.00, the valuation of this benefit will be based on actual costs including VAT.

§ 12

Direct costs include the raw materials used in preparing the meal plus preparation and serving wages including social security costs.  If the employer has agreed with a restaurant on furnishing meal services for the staff, the amount paid by the employer to the restaurant for the meal is the direct cost.

Delivery costs of the meals to the place where the employees eat are not included in the direct costs.

If employees pay back an amount of money to the employer for meals, it is not taken into account when direct costs are calculated, but it is subtracted from the tax value of the meal benefit.

§ 13

Employer-provided meals are valued at €4.20 per meal for personnel working in a hospital, school, day care center, or other similar institution, and eating at the institution.  Furthermore, the tax value of a meal for personnel supervising the mealtimes of students or patients in a school, day care center or other comparable institution is €3.36 per meal.

The tax value for hotel and restaurant staff and flight crews during flights is €4.79 per meal.

§ 14

If it is not connected with a special agreement with a restaurant on furnishing meal services for the staff, the value of a benefit given in the form of a lunch voucher or other similar method of payment with the maximum nominal value of €9.30 is 75 per cent of nominal value and at least €5.60.  If the voucher´s nominal value exceeds €9.30, its taxable in-kind benefit value will equal its nominal value.

The valuation of a voucher or similar method of payment at 75% as described above in paragraph 1 requires that employees only can use the voucher to pay for meals, i.e. no money, food ingredients or other commodities are given in return.  If the voucher does not fulfil these requirements, it will be valued at nominal value. An employee can only receive one voucher per actual working day in Finland, on the condition that the employer has not made any other arrangements regarding daily meals. 

Full room and board
§ 15

The value of room and board, lighting and heating is €431.00 per month in a single room and €414.00 per month in a shared room.  

§ 16

The value of this benefit received by a seafarer on duty equals €11.20 per day or the maximum of €252.00 per month.  

Employer-provided vehicles
§ 17

If an employee or his family uses the employer´s passenger car or van for private driving, this gives rise to a taxable company car benefit ( In Finnish: autoetu / In Swedish: bilförmån ). The tax value is based on the year when the vehicle was put into service, as recorded in its registration document, as follows: 

(a) Age group A (Vehicles put into service in the years 2010 to 2012)

Company car -- unlimited benefit (Vapaa autoetu; Fri bilförmån): 
The monthly value of the benefit equals 1.4 per cent of the replacement price of the vehicle; plus €285.00, or alternatively, 19 cents per kilometre. 

Company car -- limited benefit (Auton käyttöetu; Förmån att använda bil):
The monthly value of the benefit equals 1.4 per cent of the replacement price of the vehicle; plus €90.00, or alternatively, 6 cents per kilometre. 

(b) Age group B (Vehicles put into service in the years 2007 to 2009) 

Unlimited benefit:
The monthly value equals 1.2 per cent of the replacement price of the vehicle; plus €300.00, or alternatively, 20 cents per kilometre. 

Limited benefit:
The monthly value equals 1.2 per cent of the replacement price of the vehicle; plus €105.00, or alternatively, 7 cents per kilometre. 

(c) Age group C, (Vehicles put into service before 2007)

Unlimited benefit:
The monthly value equals 0.9 per cent of the replacement price of the vehicle; plus €315.00, or alternatively, 21 cents per kilometre. 

Limited benefit:
The monthly value equals 0.9 per cent of the replacement price of the vehicle; plus €120.00, or alternatively, 8 cents per kilometre. 

Company car benefit received in another country (Vehicles put into service before 2008)

The employee should substantiate the values based on kilometres by keeping records, such as a driver´s log.  Tax authorities may revaluate the taxable value of the company car benefit in the final assessment if the kilometres relating to private driving obviously exceed 18,000 kilometres.

If the employee uses different vehicles during the month because of the nature of his work, the basic value of the benefit should be based on the characteristics of the vehicle used most of the time.

§ 18

In Age groups A, B and C, ´basic value´ means the percentage calculated on the replacement price. ´Replacement price´ means the general recommended retail price of the make and model, valid at the beginning of the month during which the car was put into service, and quoted by the importer, or if this information is not available, the price quoted by the wholesaler, less €3,400.00. 

The percentages referred to in § 17 are calculated on this adjusted price.  The resulting amount is rounded down to the nearest 10 euros. 

A company car benefit received in another country is valuated according to the year when the car was put into service, according to its registration document as explained above in § 17.  Nevertheless, for new vehicles put into service after the year 2007, ´basic value´, within the meaning of subparagraph 1 above, means the percentage calculated on the local purchase price in the country of purchase, less €3,400, including local taxes in the country of purchase.

§ 19

If work-related driving exceeds 30,000 kilometers during the calendar year, or if the employee constantly switches from one vehicle to another, as described in § 17, paragraph 3, the basic value of the benefit is 80 per cent of the basic value under § 17 and § 18 above. 

§ 20

Any automotive accessories are included in the valuation except the usual winter tires and a car telephone.  A car telephone, if installed, is valued similarly as a mobile-phone benefit. 

The value of accessories is added to the car´s replacement price insofar as their value exceeds €850.00.  However, if any rebate granted to the employer on the accessories exceeds the ordinary cash rebate or the equivalent, the value of the accessories should be equated with their usual recommended retail price.

§ 21

If the employer pays all the expenses, the benefit is an Unlimited benefit (Vapaa autoetu / Fri bilförmån).  If the employee at least pays for the fuel, it is a Limited benefit (Auton käyttöetu / Förmån att använda bil).

If the employee pays back an amount of money to the employer, this amount should be subtracted from the taxable value of the unlimited or limited company car benefit. 

§ 22

For the purposes of valuation, private kilometrage includes commuting to and from work.

§ 23

The value of the company car benefit is increased by €435.00 per month or 29 cents per kilometre if a driver engaged by the employer takes charge of the driving.

§ 24

The driver´s log referred to in § 17 must show the daily kilometrage driven with the employer-provided vehicle during the tax year. 

The following facts regarding work-related driving must be entered daily in driver´s log:

• Start and end hours,
• Start and end locations, and the route driven, as necessary,
• Odometer readings at start and end,
• Distance travelled,
• Purpose of trip, and
• Name of user of vehicle.

Telephone
§ 25

The value of the benefit resulting from an employer-provided telephone at an employee´s home
(a stationary, fixed telephone line) is €20.00 per month. 
This value covers expenses arising from telephone calls. 

The value of an employer-provided mobile (cellular) phone is €20.00 per month.  This value covers expenses arising from telephone calls, SMS or text messages and multimedia messages. 

Application of fair market value
§ 26

A benefit in kind will be valued at its fair market value if it is not listed above, or if its fair market value, under the circumstances, is evidently lower than the value under this Decision.  

If employees pay back an amount of money to the employer for a benefit in kind, this amount must be subtracted from the tax value of the benefit.

Entry into force
§ 27

This decision comes into force on 1 January 2012 , and will apply to the calculation of withholding taxes during 2012, and the final assessment for 2012. 

Helsinki,  November 25, 2011.