Examples of Telework Tax Implications in Europe (Note: This summary was prepared in November 1999 by Imogen Bertin of Cork Teleworking in Ireland. She gathered information from a number of her telework colleagues in Europe for this report; as such, it represents their own assessments of the situation in their countries, and is not necessarily a complete or definitive description. However, it does provide a good overview of some of the taxation issues.) UK: "Benefit in kind" taxes on PCs provided to employees for home use by employers are to be abolished; however this will not be the case where a company only provides computers for use at home to professional level/managers and not to all workers. No details received on how it is planned to enforce this condition. IRELAND: Benefit in kind taxes on PCs and communications equipment provided by employers for employees at home are currently not collected. Several representations, including one by the newly established government Telework Action Forum, have been made to the Minister of Finance to abolish this benefit in kind. The budget announcement will let us know if this has been successful. DENMARK: Tax break for company-supplied PCs for use at home. In June 1997, a small change in the Danish tax laws took place which meant that a computer supplied by an employer for private use in an employee's home is no longer subject to tax as long as it is also available to be used for work-related tasks. As a result many, especially larger, organizations and companies initiated schemes in which typically more than 75% of employee households were supplied with a Pentium computer, often also including a printer, modem and Internet subscription. In return, employees are in many cases required to take the European PC "driving license course" in their own time, which also includes the possibility of distance training arrangements, although the employer pays all charges. About 35,000 Danish employees took advantage of such schemes during the second half of 1997. In 1998 Denmark experienced a record year for PC sales of 629,167, with the tax break for company-supplied PCs to employees being by far the most important driver according to the international computer marketing analyst company, Dataquest. The tax break has thus become the main factor which has recently pushed Denmark to the top of the world league table for the number of households with a computer at 61% by June 1999, with one third of all households having their own Internet access. (The Danish Statistical Service, 1999). The tax break scheme has provided a win-win situation for all actors: - For employees, the provision of a home PC with Internet subscription has given access to all family members to computing and Internet facilities, and has improved opportunities to reconcile work and private life through teleworking. - For employers, the scheme has greatly increased computing skills amongst staff (especially through the PC driving-license course), and has improved employee flexibility in terms of where, when and how work tasks are performed by making telework opportunities available. It has also opened up the possibility of distance training from work and from home. - For the computer and telecoms sectors, sales of equipment and use of the networks have increased substantially. For the government, the marginal loss of tax revenue has been more than offset by significant steps towards their plans for Digital Denmark, which aim to equip both the Danish population and the business sector with the technical skills and access necessary to fully exploit the Information Society. BELGIUM: Where a homeworking contract is signed, compliant with the 1996 law on homework (equipment to be provided by the employer, and remaining his property) - allowance for lighting, heating and the like to be agreed with the employer. By default of such an agreement, the employee has the right to claim 10 % of the gross salary - these costs are considered business expenses for the employer and booked accordingly, thus no tax or social security applies. HOLLAND: Since the first of January 1998 a company can give an amount of fl 800 (about 363 euros) per year or one time in the 5 years fl 4000 (about 1815 euros) as compensation for the furniture. There should be contract and the minimum is one day working at home. Here we find the first problems, because for consultants and salespersons it is often not possible to stay a full day at home, so be sure that the definition comes also in the tax statements, like we proposed a substantial amount of time (20% of the working time) as prerequisite, but this was by the government translated to one day at home. Further a company can buy a computer up to fl 5000 for the employees to be used at home (or a tax free compensation for this amount) Now we did find out that some tax departments consider these compensation amount as tax free, and other tax departments try to get between 19 and 34% back as perceived income, because they suspect that the equipment and furniture is also used for private matters. Most companies buy furniture and equipment and make a loan agreement, so the employees can never be taxed. We have also a problem with the telephone lines; a second analog line can be fully paid by the company, or on the name of the company or as expenses, but as soon as it is a ISDN line,even next to the analog line, the tax department does not know how to handle and considers this also as income sometimes. When a person works more than 70 % in home and earns from there the income they can claim a tax compensation of 20 % energy costs and 20% living forfeit , but this can be only handle on a personal basis, and not via the company. GERMANY: What you are referring to is probably the possibility for everybody in Germany to get tax deductions for a study room at home if the person works more than 50% of his/her working time from home. The maximum here is DM 2400, i.e. something like Euro 1300 per year. The situation was much nicer a few years ago where you could provide bills etc. without limitation. They also have become very strict with the 50% rule - it now has to be 51% plus. Teleworkers therefore need to provide written evidence from their employers that they spend minimum 3 days per week teleworking from home. In many companies people just do 2 days. What they get from their employers in writing is another story.