Are you thinking about organizing education or recreation day for you employees? We have gathered few things to take in to consideration before organizing these events.
According to the Finnish Tax Administration, staff education for the company’s needs is usually considered personal tax-exempt income for the employees. However, there are many factors that need to be met when determining whether education-related income can be considered tax-exempt: the initiative for staff education has to come from the employer, educating staff has to be in the best interest of the company and the employer, and crucial for both achieving and maintaining relevant staff skills. The education or training in question must also be relevant to the company’s field of operations.
The employer in question can apply for tax deductions on the basis of staff education and training. The right for deductions in based on many things, e.g. the training in question has to be based on a law-mandated staff education plan, which has to cover the needs of the whole staff. The staff education plan has to be devised before conducting training.
The staff is paid their salary as usual during the training period. Training has to last non-stop at least for one hour, and deductions are admitted based on full training days (at least 6 hours of training). Additionally, the employer must compile a written report on meeting the requirements for the deductions for every employee, respectively.
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Who? |
Tax effect of education |
Which conditions need to be met? |
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Employee |
Tax-exempt income |
– Education has to be provided by the employer |
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– The initiative must come from the employer |
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– Training must relate to the employee’s duties |
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– Training must be in the benefit of the employer |
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– Training in question must take place during employment |
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Employer |
A tax-deductible expense |
-Training in question must be based on the staff education plan |
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– The staff education plan has to cover the whole staff |
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– Salaries must be paid accordingly |
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– The employee in question must take part in the training |
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– Training must last for at least 1 hour. Deductions are admitted based on full days (at least 6 hours of training) |
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For further information on how to correctly calculate your deductions and other factors, visit the Finnish Tax Administration (in Finnish):
Työnantajan kustantaman koulutuksen verotus
Recreation to benefit the whole staff
A recreational outing can be the perfect way of taking care of your staff’s wellbeing and promoting team work. Staff recreational events provided by the employer have been defined in the Finnish Income Tax Act (30.12.1992/1535, 69 §) as tax-exempt benefits for the staff, provided that the event has truly been organized by the employer and that every single member of the staff has the opportunity of taking part. If a recreational event is organized for only a part of the staff, it is no longer tax-exempt. A recreational event meant for the whole staff of the company can be classified as tax-deductible expenses.
For more information on tax practices relating to recreational events and other staff benefits, visit the Finnish Tax Administration (In Finnish): Työntekijän omaehtoinen liikunta- ja kulttuuritoiminta verovapaana etuna
