Expense reimbursement processes and tax treatments can vary significantly depending on the country and the specific circumstances of the reimbursement. Below, we provide an overview of how the Remote People platform supports expense reimbursements, including compliance requirements and country-specific guidelines.
Overview of Expense Reimbursement on the Remote People Platform
The Remote People platform is designed to streamline expense reimbursement processes while ensuring compliance with local regulations. However, it is important to note that:
The platform focuses on invoicing and is not a payroll system. It does not automatically reclassify items or calculate gross-up/taxes. Payroll processing, including tax calculations, is handled by specialized payroll partners.
Expense claim approvals must be processed within the platform to maintain compliance and adhere to the proper approval workflow. Manual approvals outside the system are not supported.
General Principles of Gross-Up and Tax Compliance
Gross-up calculations are applied to ensure employees receive the full net reimbursement amount after taxes. The application of gross-up depends on local tax laws and the completeness of supporting documentation. Below are some general principles:
Gross-up ensures that employees are not financially disadvantaged by taxes on reimbursed expenses.
Compliance with local regulations and documentation requirements is critical to determine whether gross-up is necessary.
Country-Specific Guidelines
Thailand
In Thailand, gross-up is applied under the following conditions:
If the employee submits original invoices/receipts and a completed Excel form per ATA’s requirements, and the expenses are identified as work-related, no gross-up is applied.
If supporting documents are incomplete or invalid, the expenses are treated as taxable, and a gross-up is applied to cover the employee’s personal income tax (PIT). The gross-up amount is charged to the employer’s burden.
Poland
In Poland, expenses may be reimbursed as net (without gross-up) only if:
The expenses are strictly related to qualifying business purposes, such as a business trip.
The sales documents (invoices/bills) are issued with the employer’s Tax Identification Number (TIN).
If these conditions are not met, expenses are grossed up to account for taxes and contributions. Additionally, automatic currency conversion features do not affect gross-up decisions, as these depend on Polish regulations and document eligibility. All expense reimbursements in Poland are grossed up rather than paid net. If the invoiced amount appears lower than expected, it may be due to employer taxes initially being estimated based only on gross salary, excluding grossed-up expenses. When expenses are grossed up, related employer taxes are recalculated, increasing the total employer cost.
Hungary
In Hungary, gross-up calculations for expense reimbursements use the same tax rates as gross salary. For example:
Personal Income Tax (PIT): 15%
Social Security Contribution: 18.5%
These rates are applied to the expense amount to calculate total deductions, ensuring the employee receives the net-approved amount. This process explains why expenses are taxed by grossing up the net-approved amount.
Conclusion
The Remote People platform supports expense reimbursements by ensuring compliance with local regulations and providing a streamlined approval process. While the platform does not handle tax calculations directly, it works in conjunction with payroll partners to manage gross-up and tax compliance effectively. For country-specific guidelines, it is essential to adhere to local documentation and regulatory requirements.