The intended amendment concerns the part of the Income Tax Act that regulates fringe benefits. A part of the amendment concerns covering the accommodation expenses of workers and the other part is about transporting them to work and back home.

The business-related expenses of an employer will no longer be considered fringe benefits if they are incurred in order to accommodate a worker working on the basis of an employment contract and if the following conditions are met:

  1. the worker’s place of residence is at least 50 kilometres from the workplace and the worker does not own any property used as a place of residence closer to the workplace, and these conditions are met during the entire accommodation period;
  2. the expensed per accommodated worker are up to 200 euros per calendar month in the event of accommodation in Tallinn or Tartu and up to 100 euros in all other cases.

The limit is tied to a specific person and they can be added up. For example, an employer may accommodate four workers in a four-room apartment in Tallinn, which costs 800 euros per month.

A worker may not own property used as a place of residence within 50 km from the workplace in order to use the tax incentive. This condition is stricter than just the absence of a place of residence near the workplace. Place of residence means property that can be used as a home (apartment or house).

If the amendment is passed in the Riigikogu, the employer can compensate the accommodation expenses of workers within the permitted limits without having to pay tax.