Treatment of Tax-withholding Expense Reimbursements

If the maximum amount of expenses that are processed as travel claims, for example daily or mileage allowances, exceed the largest possible compensated tax free amount identified by the tax authority, then the additional amount is taxable income to the recipient and it must be processed in payroll for withholding tax.

Travel expenses subject to withholding can be handled in such a way that payment of travel claims is made by transferring all travel claims into the payment system. Then, the information on taxable allowances that the application obtains from the expense report is manually stored into payroll.

For export report printing, you can also specify an interface that will transfer the expense report data to the payroll system in machine readable coding. Also in this case, the entire travel claim is passed on to the payment system for payment, and only the calculation of withholdings is done in payroll.

The third option for processing expenses that are subject to withholding tax is to create an interface directly in the payroll system for travel claim payment, which means that both the payment and the withholding of tax is processed through payroll.

For additional information about defining interfaces to the payroll system, contact the supplier of your application.