How to provide material assistance to an employee without taxation
Due to the military actions in Ukraine, our economy is in recession, inflation is increasing, due to which many working citizens may be in a difficult financial situation or they may simply not have enough wages to cover basic needs, because since 2022 the hryvnia has weakened by 1.5 times relative to the US dollar, moreover, those who even had an increase in wages - simply do not feel it.
Employers can fulfill a certain social role and provide their employees with additional material assistance for non-targeted needs. All that is required is for the employee to write a statement , and for the employer to issue an order for the enterprise . The amount of the desired financial aid is written in the application, but the final amount is determined by the employer.
In the statement, we indicate the following grounds:
- non-targeted material assistance in connection with family circumstances;
- non-targeted material aid in connection with the difficult material situation due to military actions on the territory of Ukraine.
As for taxation, according to paragraph 169.4.1. and clause 170.7.3. PKU , if the amount of such assistance does not exceed UAH 4,242.20 per year (UAH 3,023.00 (monthly subsistence minimum for an able-bodied person on January 1, 2024) x 1.4), then it is not taxable . In cases where material assistance is of a systematic nature or its payment is provided for by the regulations on wages for hired workers (collective agreement), such material assistance is equated to wages and its entire amount is taxed at the rate of 18% and the military levy of 1.5%.
Our website has a template for an employee's statement and an order for the enterprise to provide non-targeted financial assistance , thanks to which you can quickly prepare the specified documents. In addition, the site has a large number of other document templates .
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Date of publication: 13.02.2024