Employer compensates for travel expenses to work: is it needed to pay taxes?

Press service of the State Tax Service of Ukraine, published 20 October 2026 at 12:13 Chapter: News

Daily travels to work can be a significant expense, especially if a person has to use a taxi. Sometimes employer agrees to reimburse employees for all or part of their travel expenses. Is it needed to pay taxes on these expenses?

Yes. If employer reimburses employee for travel expenses to and from work, this is considered a fringe benefit and is taxable.

Why is compensation taxable?

Tax Code of Ukraine provides that additional benefits that employee receives from the employer are included in taxable income.

Regular trip from home to the work place and back is not considered performance of labor obligations. Therefore, the employer is not obliged to reimburse such expenses, but can do so at its own discretion.

In this case, the compensation amount is additional benefit of the employee and is taxable.

For example: employee takes taxi to the office every day. Pays for the trips, but at the end of month the employer reimburses for the spent funds.

Such compensation is considered income for the employee, even if the employee can confirm expenses with checks or receipts.

This rule applies not only to taxis, but also to compensation for regular travel by the public transport.

What taxes must be paid?

In 2026, the following will be deducted from amount of monetary compensation:

- 18% - personal income tax;

- 5% - military levy.

For example, the employer has paid the employee 1 thousand UAH of travel compensation.

From this amount, 180 UAH of the personal income tax and 50 UAH of the military levy will be deducted. Therefore, the employee will receive 770 UAH.

Who pays taxes?

Taxes are calculated, withheld and transferred to the budget by the employer as a tax agent.

Employee does not need to pay them independently.

Should declaration be submitted?

No. If the employer withheld taxes from the travel compensation, it is not necessary to submit annual property and income declaration only due to the receipt of such funds.

Therefore, compensation by the employer for ordinary expenses for traveling to work or home is additional benefit for the employee. Regardless of whether a person uses taxi or public transport, such monetary compensation is subject to the personal income tax and military levy.