For several months now, many people have been working from home. And as the recommendations look for the day, as many as possible should continue with it for the rest of the year. We have received many questions in our tax information service from employers and employees about what applies for tax purposes if you have a room decorated in the home with, for example, a desk and office chair. In this article, we describe what applies with regard to the right to deduct purchases and possible benefit taxation for the employee.
Since early spring, many employees have carried out their work from the home. In the best cases, perhaps in a workroom with similar equipment to the one you have at your regular workplace. In other cases, perhaps at a kitchen table sitting on a simpler kitchen chair.
Few if anyone could have guessed that the ongoing pandemic would last for such a long time and probably many of us will perhaps work from home for the rest of the year.
The questions we receive are about whether the employer or the employees can buy better work equipment for their home workplace and what applies to the employer's right to deduct and the employees' possible benefit taxation.
Tax-free work tool
In order for there to be no risk of benefit taxation of the employee, it must be a tax-free work tool according to the definition in ch. Section 8 of the Income Tax Act (1999: 1229). This means that the product or service must be of significant importance for the employee to be able to perform his or her duties. Furthermore, the benefit must be of limited value to the employee and the benefit of the work tool must be difficult to distinguish from the usefulness of the employment.
It is the employer who makes the assessment of whether the employee needs, for example, an office chair and a desk in order for the work to be carried out in the home. The employer receives a full deduction in terms of income tax and also receives a deduction for VAT. The purchased equipment is the employer's property that he can request back if / when the homework ends.
With regard to the payment itself, it is appropriate that the employer pays directly to the seller or that the employee makes an expense on behalf of the employer. One should be careful about paying any form of lump sum or allowance to the employee that can be used for purchases. The latter solution involves a taxable compensation.
Benefit taxation at the time of purchase?
There is no taxable benefit for the employee for the value of the equipment if this is needed for the employee to be able to perform his work.
Benefit taxation at a later time?
A benefit situation may occur at a later time. This could be the case if the homework ceases and the employee is allowed to keep the equipment in the home. A benefit value must then be calculated at the current market value at this time. A rather delicate task to determine.
Sara's employer bought an office chair and desk to place in Sara's home in the spring of 2020. Cost SEK 5,000 including VAT.
The idea is that Sara will return to the company's premises full time on 1 October. Her employer has said that the equipment can remain in her home. There are no plans for Sara to work from home in the future linked to her duties.
Sara has then made a saving in her private living costs when she is allowed to keep the equipment and a benefit value must be determined based on the value as of 1 October.
We have also been asked whether an employer can provide home-based employees with other benefits. For example, for the intrusion into the home, increased electricity consumption, contribution to the cost of broadband and increased consumption of coffee.
Compensation for the encroachment on the home could be taxed in the income category capital. This is based on the employer having a need for the space, that there is an agreement and that the compensation is market-based. If these conditions are not met, taxation takes place in service. Keep in mind that deductions from rental income when letting to the employer are limited to reasonable additional costs, normally SEK 1,000 - 3,000 per year.
The increased electricity consumption can not be reimbursed tax-free in the form of subsidies but could justify a higher deduction than the amounts above if there is a rental agreement between the employer and the employee.
With regard to subsidies for the cost of broadband, such would probably be taxable. If the employee already has an installed broadband, which can be assumed to be very common, no additional cost arises for it to be used in the service.
Contributions to coffee and coffee and fruit are probably also taxable as the normally tax-free employee care benefit is based on having coffee at your workplace. One argument could be that housing is now my workplace. Exciting if anyone would like to pursue such a case!
Own deduction - work tools
If the employer does not pay for the purchase of a work tool, the employee can claim a deduction for the purchase in his own income tax return. To get through a deduction, it is required that the expense is necessary for the acquisition of income. Deductions are only allowed for the part that exceeds SEK 5,000. Practice in this area is very restrictive, which is why it is a strong recommendation that the employer make the purchase of the work tool if there is a need for the equipment.
Own deduction - workroom in the home
You could imagine your own deduction in the income tax return for work in the home. Keep in mind, however, that the conditions below must be met. Practice in this area is also very restrictive. Deductions are only allowed for the part that exceeds SEK 5,000 and it is recommended that you make an open claim to avoid that this is an incorrect statement.
In order for deductions to be allowed, the following requirements must be met:
- The employer may not provide a workplace
- There must be a clear need for a workroom in the home
- The work space must only have been used for the work
- The dwelling must be larger than what would have been required if the taxpayer had not had to have a workroom
- The workroom may not be included in the living space with regard to location or equipment.
For workrooms in your own home, a deduction is allowed with the actual additional cost. For example, there may be additional expenses for electricity, heating and cleaning. For work rooms in a rental apartment, a certain part of the rent can also be deductible.
One speculation for the future is that many will work partly from home even when working life returns to a more normal situation. Many of us have discovered that most things go well.
The equipment can then probably remain in the employee's home and be used when needed. If the employee quits, the equipment must be returned to the employer or bought out or taxed on benefits at the current market value.
The article is published in the news service Tax Information from Wolters Kluwer .
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