Employee uses own car for work trips, refuels it at own expense, and employer later reimburses costs for gasoline or diesel fuel. Can such compensation be considered employee’s income and is it subject to the tax?

Yes. If employer reimburses employee for the fuel costs for his/her own car, such monetary compensation is generally considered additional benefit and is taxable.

Why is compensation taxable?

Tax Code of Ukraine provides that monetary reimbursement of employee’s expenses is included in taxable income as additional benefit, unless legislation provides for a corresponding exemption.

This rule also applies when employee uses own car in business activities of the enterprise.

For example: employee drives own car to meet with clients, delivers documents or performs other official tasks. Employee buys fuel for such trips at own expense, and the enterprise later reimburses him/her for the spent amount.

If it is cash reimbursement to employee for the fuel cost purchased by him/her, such compensation is taxable. Presence of gas station checks confirms expenses, but in itself does not exempt the compensation from taxes.

What taxes have to be paid?

In 2026, monetary compensation for the fuel cost, which is recognized as additional benefit, is taxed at the following rates:

- 18% – personal income tax (PIT);

- 5% – military levy.

Who pays taxes?

Employee does not need to independently calculate and transfer taxes on received compensation.

Employer does this as a tax agent. Employer withholds personal income tax and military levy from the compensation amount, transfers them to the budget and pays remaining funds to employee.

What about single contribution?

Different rule applies here. If employee uses own transport for the enterprise’s needs, and employer compensates for the fuel cost consumed within framework of his economic activity, such compensation is not basis for accruing single contribution.

Therefore, under the specified conditions, personal income tax and military levy are withheld from the compensation amount, but single contribution is not accrued on it.

Is it needed to submit declaration?

No. If compensation is paid by employer as a tax agent, it is not necessary to submit annual assets and income declaration solely due to the receipt of such payment.

Therefore, reimbursement by employer of the fuel cost for employee’s own car is generally taxable, even if car was used for business purposes. Taxes are withheld and remitted by the employer.