Mileage management – avoiding the tax traps

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Tax considerations

Bonuses accrued by the employee from flight miles or hotel arrangements used in the course of his or her business trips are either the property of the company or a benefit with monetary value for the traveller.

On 29 April 2010 the Austrian Administrative Court of Appeal (VwGH) ruled that there was no change in the liability to tax: private use of bonus miles from business travel remains a taxable benefit from employment, although only taxable when actually used.

Bonus miles are benefits that are provided by a third party not at the instigation of the employer, so that the employer is not responsible for any tax liabilities arising.

Benefits from bonus miles are not subject to payroll income tax deduction at source, but must be included in employees’ tax declarations, which means that no additional tax burden on the company arises.

If under the existing interpretations by the Austrian Independent Tax Tribunal and the deduction of tax at source guidelines you have paid payroll taxes, you are entitled in the current tax year to reclaim them. For past tax years, the employee is entitled to reclaim tax deducted at source, and for years for which tax assessments have been finalised, the employee may request revision of the assessment.

Applications for refunds of payroll taxes may be submitted to the tax office or the relevant local government office.