Serbian Ministry Of Finance Clarifies The Requirement For Valid Transportation Cost Documentation

On 25 April 2019, the tax authorities issued an official notice to the Serbian Chamber of Commerce regarding the issue of employees' transportation cost taking into consideration the Ministry of Finance's opinion no. 011-00-12/2019-4 dated 1 February 2019.

The Labor Law prescribes the employee's entitlement to compensation of costs of transportation to and from work, based on the general corporate regulation and employment contract equal to the amount of the price of a public transportation ticket, unless the employer has organized its own transportation. The compensation - according to the law - is not to be considered as salary.

Article 18 paragraph 1 item 1 of the Personal Income Tax Law specifies that salary tax is not paid on employee's earnings from the employer for compensation of costs of transportation to and from work - up to the amount of the monthly transportation ticket in public transport, or in the amount of actual transportation costs, and at most up to 3,914.00 dinars per month (non-taxable amount of costs of transportation to and from work which is effective in the period from 1 February 2019 to 31 January 2020).

The Ministry of Finance opinion no. 011-00-12/2019-04 dated 1 February 2019, provides - inter alia - that if the employer does not have valid accounting documents as proof of the cost of an employee's transportation to and from work (such as invoice for the purchase of a monthly ticket, a daily ticket or a single ticket for the use of public transport, an invoice for fuel, in case of use of own vehicle, etc.) but has paid out compensation adequately, such costs cannot be recognized as an expense.

Therefore, based on the above provisions of the Labor Law and the Personal Income Tax Law, and the Ministry of Finance opinion no. 011-00-12/2019-04 dated 1 February 2019, employers- taxpayers are required to have valid accounting documents as a basis for payments made to employees for compensation of costs of transportation to and from work.

By way of background, it is worth noting that the details of the entitlement to the payment of transportation costs as well as the amount of such costs' compensation can be regulated via a a general corporate regulation, a collective agreement or employment rulebook, as well as in an...