TESTING FOR COVID-19 FOR AN EMPLOYEE TRAVELLING ON A BUSINESS TRIP ABROAD

Testing is a prerequisite for entering a foreign country. The employer paid the cost of testing for COVID-19 for the employee to go on a business trip abroad and took on the costs of purchasing an insurance policy covering treatment for COVID-19.

Does this create an additional benefit for the employee?

Types of travel expenses reimbursed to the employee are specified in clause 170.9.1 of the TCU. These expenses include other documented expenses related to the rules of entry and stay at the place of a business trip and compulsory insurance costs. Exemption from personal income tax of these expenses is provided for in clause 165.1.11 of the TCU. We do not charge a military levy based on subclause 1.7, clause 16¹, Sub-section 10, Section XX of the TCU. These rules apply only if there are original supporting documents and their connection with the business activities of the enterprise.

Thus, if the entry condition to a foreign country and stay on its territory is testing for COVID-19, when reimbursing the costs of such testing from the employee, an additional benefit does not arise.

In addition, to enter some countries, you must also have an insurance policy that covers treatment for COVID-19. If such a policy is mandatory for entering a particular country, the company is obliged to compensate the employee for the cost of purchasing it. After all, without it, the employee will not be able to go on a business trip abroad.

Although COVID-19 insurance is not explicitly specified in clause 170.9.1 of the TCU, its cost, if there is documentary evidence of the expenses incurred, is not the employee’s income. These are travel expenses related to the rules of entry and stay at the place of a business trip (second paragraph, subclause “a”, clause 170.9.1 of the TCU). The cost of testing and insurance policies related to COVID-19 required for a business trip abroad is also not the basis for calculating USC since travel expenses are not included in the salary fund according to clause 3.15 of Instruction No. 5 and specified in clause 6, Section I of List No. 1170 among the payments for which USC is not accrued.

It is essential to take care of proof that without a negative “COVID” test and a COVID-19 insurance policy, your employee will not be able to be sent to a particular country. To do this, you can apply the information on the website of the Ministry of Health (covid19.gov.ua/border) or on the website of the country’s embassy in Ukraine.

You can also choose another way. Clause 165.1.19 of the TCU comes to assistance, which deducts from taxation funds or the value of the property (services) provided as assistance for treatment and medical care at the expense of the employer if there are supporting documents.

One of the options can be as follows. The employee writes an application with a request to provide assistance for medical care — testing for COVID-19. The employer pays the cost of such testing to the medical institution and issues an order to provide assistance for medical care according to clause 165.1.19 of the TCU. Then it receives documents confirming the provision of services.

The amount of assistance for treatment and medical care of employees must be reflected in Section I of Tax Calculation 4DF with the income attribute “143”. Assistance to pay for treatment is not included in the USC accrual base since it does not belong to the payroll fund according to clause 3.31 of Instruction No. 5 and given in clause 14, Section I of List No. 1170.