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Taxation of Smartum payment instruments

Taxation of Smartum exercise and culture benefits

In accordance with the Income Tax Act, the Smartum Liikuntaseteli and Liikunta- ja kulttuuriseteli vouchers and the Smartum Saldo balance are tax exempt employee benefits under the following conditions:

  • The amount of the benefit is reasonable and conventional. An employer can provide each employee with up to €400,00 worth of Liikuntaseteli or Liikunta- ja kulttuuriseteli vouchers or Liikuntasaldo or Liikunta- ja kulttuurisaldo balance loaded on to a Smartum account per calendar year tax free. This sum is the share paid by the employer. In addition to this, the employee may be required to pay an excess share.
  • The benefit is for the most part made available to all of the company's employees.
  • The benefit is personal and the user of the voucher or card may need to provide identification at the cash register of the exercise venue. On the Smartum card the name of the beneficiary is printed on the card. Vouchers can be named by either writing the name of the employee on the back of the vouchers before they are handed over, by ordering the vouchers pre-designated from Smartum Oy or by naming the vouchers electronically in the Smartum online service.
  • The payment instruments can only be used to pay for cultural services and active exercise services defined by the Finnish Tax Administration.
  • The value of the voucher is printed on the voucher.

Deductibility

Smartum Oy's targeted payment instruments allocated for exercise and culture are a safe option for employers and employees as they meet all the requirements set by the Finnish Tax Administration. Companies can deduct the acquisition costs of Liikuntaseteli and Liikunta- ja kulttuuriseteli vouchers and the Smartum Saldo balance loaded on to Smartum accounts as normal business expenses. There is no risk of post-collection or tax penalties as long as the payment instruments are used in accordance with the instructions provided.


Taxation of Smartum Lounas

Smartum Lounassaldo is subject to section 14 of the Finnish Tax Administration's decision on In-Kind Benefits, according to which the value of the in-euro balance loaded on to the card is 75 percent of the nominal value of what is charged as long as the following conditions are met:

  • the card can only be used to pay for a sum between €6.40 and €10.30.
  • the card can only be used to pay for meals, i.e. no money, food ingredients or other commodities are given in return.
  • 75% of the amount loaded on to the card equals at least €6.40 (per actual working day for which the employee wishes to receive the benefit)

Smartum Lounassaldo meets all these requirements as long as the amount of the benefit loaded on to the card by the employer corresponds to the employee's actual working days. An employee cannot receive more than €10.30 as card balance per actual working day in Finland, on the condition that the employer has not made any other arrangements regarding daily meals. If it is found at the end of the season (for example on the first day of the year) that the employee has been provided with more benefit than he or she was entitled to based on his or her number of working days, the exceeding benefit is valued at 100%.

A fringe benefit or meal deduction?

A lunch benefit can be offered to employees either as a fringe benefit or in the form of a meal deduction. The lunch benefit is ordered from Smartum in exactly the same way regardless, the only difference is how the benefit is handled within your company.

Fringe benefit

   
The employer The employee
  • A benefit offered on top of normal salary.
  • The employer pays the nominal value of the benefit, which is tax deductible.
  • The benefit is processed as pay (at 75%) when entering withholding tax in payroll accounting. 
 
  • 75% of the benefit is taxable income in accordance with the employee’s personal tax rate.
  • The employer pays for the benefit, the employee only pays the taxes.
  • A fringe benefit offered on top of normal salary also accrues pension.

Meal deduction

  
The employer The employee
  • The taxable value of the lunch benefit (75%) is withheld from the employee’s salary.
  • The employer pays the nominal value of the benefit minus the taxable value. The remainder is tax deductible.
 
  • The employee pays the taxable value of the lunch benefit (75%), for example for a €10,00 lunch voucher, the employee would pay €7,50. The employer can withhold the sum from the employee’s salary.

Taxation of Smartum commuter benefit

  • You do not necessarily need to offer the commuter benefit to your entire personnel. The benefit can also be offered to persons who have an unlimited company car benefit (up to a maximum of €300).
  • Employers can offer the commuter benefit on top of employees' regular pay or as part of their current pay.
  • The commuter benefit is particularly useful for employees who are not eligible for a travelling expense allowance because their travel costs from travel between their home and workplace are under €750.
  • The benefit is personal and the employee can use it to purchase either a value ticket (balance added to a personal card) or a season ticket.
  • The commuter benefit is a tax free benefit up to €300 and between €751 and €3,400. The procurement costs are tax deductible for the employer. For example if the employee's benefit amount is €1,000, €450 of it is taxable and €550 is tax free.
  • The commuter benefit is meant for travel between the home and the workplace, but it can also be used for leisure time travel.

The benefit amount determines whether the benefit is tax free or taxable for the employee:

€ 1–300/yearTax free
€ 301–750/yearTaxable
€ 751–3,400/yearTax free
    

For example if the employee’s benefit amount is €1,000, €450 of it is taxable and €550 is tax free.