In some countries, certain business expenses or gifts may have payroll implications. In other words, employees may be liable for income tax on the amounts received. Companies are legally obliged to deduct such amounts from the employee’s salary.

To facilitate payroll, Yokoy generates a report of taxable amounts of expenses (i.e. expense amounts subject to income tax), broken down by employee so that it can be processed by a third-party payroll system. Yokoy calculates the tax amount on receipt, receiptless, and mileage expenses. Expenses marked as credit notes are excluded from this calculation.

In Yokoy, you set up tax rules to calculate the taxable amount applicable per employee. In the tax rule, you determine the aggregation period over which expenses are accumulated and the threshold over which expense amounts are subject to tax. Tax rules are set up for specific categories, meaning that any receipt, receiptless or mileage expenses submitted for those categories are subject to the tax rule.

For example, you set up a tax rule that determines that all meal expenses over EUR 100 per annum are subject to income tax. An employee takes two trips during the year and submits two meals for 45 EUR on each trip. The meal expenses on Trip 1 do not exceed the threshold for the year; therefore, they are not subject to tax. On Trip 2, the first meal expense exceeds the accumulative EUR 100 threshold; therefore, part of that expense is subject to tax. The last meal expense is entirely subject to tax.

Taxable amounts are calculated for all own company participants (i.e. users belonging to the legal entity of the expense). Yokoy does not calculate taxable amounts for participants from other companies in the organization or external participants (i.e. employees from other organizations).

For expenses where participants were specified as a number and as a name in a text field and for mileage expenses, taxable amounts are calculated for the submitter of the expense or person for whom the user submits the expense in the case of assistants. The expense amount is always divided equally among the number of participants (regardless of whether they are Yokoy users or external). For example, if the number of participants in a EUR 100 expense is 2, then the expense amount on which the taxable amount is calculated is EUR 50.

The taxable amount for tax on company benefits is calculated during the export process. Expenses in draft, approval, review or ready to export status are not considered in the taxable amount calculation. The calculation takes into consideration the current expense and all previously exported expenses for the same employee and category within the same period as specified by the tax rule.

When exported, the expense is updated with a summary for each tax rule of the taxable amounts for the participants listed on the expense. In addition, the summary displays previous expenses associated with the same tax rule for traceability purposes. If several expenses are exported in the same export job, Yokoy calculates the taxable amount for each expense successively depending on (in order of priority):

In other words, if there are multiple expenses in an export job, the expense with the oldest expense date is calculated first, then the next oldest, and thus successively until the taxable amounts for all expenses included in the export job is calculated.

Since taxable amount calculation is performed directly after the expenses are exported, if an export job fails at any stage, no calculation is performed. Therefore, the expenses can be re-exported without any impact on the taxable amount calculation.

Tax rules are fully independent; meaning the applicability of one tax rule to a specific category does not impact the calculation of any other tax rules that may apply for the same category. If multiple tax rules apply (i.e. one with a weekly aggregation range and another rule with a monthly aggregation range) to the same category, Yokoy calculates the taxable amounts for each rule independently. Since Yokoy provides the taxable amount per participant for each rule, it is the customer’s responsibility to determine which of the tax rules should apply and which taxable amount must be taken into account when calculating the tax on company benefits to avoid double taxation.

A tax rule’s validity is retroactive, but the calculation itself is not retroactive. For example, a company sets up a tax rule with an annual aggregation period on 1 March, but retroactively sets the start date as 1 January 2025. Taxable amount calculation is only performed for expenses exported on and after 1 March 2025. The taxable amount is not calculated retroactively for any previously exported expenses. However, all exported expenses with an expense date on or after 1 January are considered and impact the calculation of the taxable amounts for the expense(s) exported on 1 March or after. In the tax rule summary for the 1 March expense, these previous expenses are listed with a taxable amount of zero, since no calculations were performed for these expenses. The sum of the expense amounts for the previous expenses determine whether the current expense surpasses the threshold.

While tax rules are generally set up over a specific aggregation period, Yokoy can also be configured to calculate taxable amounts on individual expenses. When the aggregation period is per expense, Yokoy calculates the taxable amount based on the individual expense and doesn’t take into account any other expense that may have been submitted. You can choose whether to determine the entire amount as taxable once it exceeds the threshold or only to consider the taxable amount to be the proportional part that exceeds the threshold. For example, if you set up a tax rule with a threshold of EUR 100, for an expense of EUR 150 Yokoy can either determine the taxable amount to be EUR 50 (i.e. the amount that exceeds the threshold of 100, or consider the full expense as taxable, (i.e. EUR 150) since the expense exceeds the set threshold.

This feature does not calculate taxable amounts for per diems. In other words, the taxable amount for benefit in kind that may be applicable on any company-paid excess on per diems in some countries (i.e. when a company pays employees per diems in excess of the German national rate). Yokoy calculates taxable amounts for per diems separately. However, bear in mind that double taxation may occur since both the expense and the per diem may be deemed as being subject to tax.

For example, an employee is one of the participants in a dinner expense. Taking the expense amount as a participant, it may be deemed that the amount is subject to tax for that employee and the taxable amount is calculated accordingly. If the employee then selects a modification to deduct that meal from the per diem for that day, it may result in a tax implication for the per diem. The modification can change the tax free amount and thus the income taxable amount of the per diem expense. If both income taxable amounts (the one from the receipt expense and the one for the per diem) are added up, in principle double taxation may be possible.

A company processes three expenses within the same aggregation period and exports them the one after the other. A tax rule has been set up for a threshold of EUR 60 per annum.

The taxable amount calculated for each participant is as follows:

Once an expense or expenses that have applicable tax rules have been exported, the expense is updated with a breakdown of taxable amounts for all own company participants for each rule that applies to the expense.

The breakdown is grouped by tax rule and lists:

For the applicable tax rule, you can view all expenses contemplated as part of the tax rule calculation for the period for the participants on the expense by clicking View participant(s) expenses.

You can see an expandable section for each participant on the expense, which lists the current expense and previous expenses contemplated within the aggregation period defined for the tax rule. For each expense, you can see a description of the expense, the expense date, the status of the expense, the participant’s share of the expense, and the taxable amount for that expense.

Participant details are sorted by the order in which participants are added to the expense.

In Analytics, you can generate an ad hoc expense report with all taxable amounts by employee, as well as details on the tax rule used.

The data fields specifically related to taxable amounts on company benefits you can include in expense reports are:

In Values (aggregated), you can select Taxable amount. The resulting report can be used for processing in your payroll system.