highupinthesky

When I hear about tax on FFF points, my first question is always. What is the value of the points? With my SAS Mastercard status, I can book a business flight worldwide at Eco price. But even without that, the price for a flight goes up the closer you get to departure, but the FFF point price stay the same. So what value does the TAX authority want to use for calculating the TAX?

CPH-Flyer

The example I posted above in Norwegian language indicated that it should be based on the cash price for the same flight at the same time booking, minus any YQ paid for the redemption.

Fassy (I think it was) spoke about a German example where Lufthansa pays the tax based on (my guess) the book value of the points. Which seems a much better approach in my view. If this taxes private earned points as well as corporate earned points, but at 2.25% I am certain this is added to the calculation of setting the percentage.

fassy

Well, so not getting the miles awarded will be taxed but spending them? So for that Lufthansa F award they want to recognize 100.000 NOK value and tax it? That would be obscene. And what about the devaluations of points? Can I then claim tax back? What if I don't use them and they expire? What if I save them for some years for that big trip, does that mean I will have a couple of years tax free and in one year get massively taxed?

And I would take this to the court.... A mile/point has a fixed value for an airline FFP which is reported in the financial statements of the program/airline. This can be the only baseline for taxation. Everything else would make no sense at all....

Yes, the Lufthansa (and also SAS) financial statements list the number of points and the associated cash value they have to hold for that. I think it is about 0.01c/mile or so. If you are really interested look through the financial statements.

Im a new user

You pay the tax when you use the points, not when you earn them. The tax is based on the value of the benefit, not the value of the points.

Points earned from business travel
Spent on business travel (award bookings, upgrades, hotel bookings etc.): No tax payable.
Spent on private travel: Tax payable.
Points expired, not used: No tax payable.

Points earned from private travel
Spent on business travel (award bookings, upgrades, hotel bookings etc.): Not sure. Maybe you can get a tax refund?
Spent on private travel: No tax payable.
Points expired, not used: No tax payable.

Special cases
Points earned through travel for Employer A, spent on travel for Employer B: Probably no tax consequences for the employee. Employer A and Employer B maybe have to report this as a loss/gain, respectively (affects corporate income tax for both employers).
AY palkintopisteet converted to tasopisteet (details): This benefits both private and business travel, so I'm not sure if it counts as private or business use of the points.
Small benefits such as lounge access and fast track: Not taxed in Norway according to this. No idea if these benefits are taxed in other Nordic countries.The tax administration might see that the award ticket you booked has some extra benefit (such as extra luggage or more flexibility) and assume that you booked the award ticked because some of those benefits were essential, and then they would ask you to redo your calculation of the reward ticket to take those benefits into account. On the other hand, if the reward price is less than the reward taxes and fees, then you would probably get away with claiming that you didn't need the extra benefits but that you weren't able to book an award ticket without those benefits, and so the value of the extra benefits is zero. If you haven't kept screenshots showing the applicable reward price, then they would probably come up with some unfavourable value for you.

The main issue is that private and corporate assets are in the same account. It's a lot easier to track points if different accounts are used, but airlines typically don't allow this, so the only way to get around this might be to credit private points to SK and corporate points to LH (or something).

Im a new user

Yes. You should inform the employer you worked for when you earned the points (even if you have since switched to a different employer, I think). SJ (Swedish railways) has some information on how this is done in section 8 of the SJ Prio terms of use (in Swedish). I assume that this works in approximately the same way in all Nordic countries.

CPH-Flyer

I guess the Norwegian government has chosen to go for the "visible value" for the traveller. And while I agree that a Lufthansa F redemption does not have a value to the traveller of 100Knok, I could probably also arugue that it has a higher value than the book value of the associated points. But I'd leave that for the authorities to fight over. It will be interesting to see the first cases of this going through taxation and potentially litigation.

GUWonder

A lot of business owners/partners and senior managers in Scandinavian countries co-mingle business with pleasure. I expect a lot of people already come up with excuses for making business trips out of what are mainly pleasure trips, and this will probably continue to take place with regard to the use of FFP points earned from work/business travel.

fassy

fassy

Im a new user

Eh, you pay tax in the country where you are domiciled. If you are domiciled in Norway, then you pay tax on your points in Norway, according to Norwegian rules. If you are domiciled in Sweden, then you pay tax on your points in Sweden, according to Swedish rules. Presumably, SJ Prio mostly has Swedish customers, so they only tell the Swedish rules.

Im a new user

You declare some value. If the tax authority disputes this value, then you may be asked to provide evidence. If the tax authority disagrees, then the tax authority chooses a different value. If you wish, then you can appeal the tax authority's decision to a court.

If you have screenshots showing the cost of a revenue ticket at the time of booking, then you can probably use this value. You can maybe also use the price for buying points, should this be lower. If no screenshots were kept, then I have no idea how to come up with a suitable value. However, it can't be more complex than the situation where someone has given you salary in cash and not informed the authorities or kept any documents: they must have a way to invent some (presumably unfavourable for you) value.I think that you should look at what is included in the product. If you simply want to travel as cheap as possible and don't need flexibility or luggage, then you can maybe get away with comparing the cheapest award ticket with the cheapest revenue ticket and declare that the value of the extra benefits is zero. If you specifically add extra benefits (like business class instead of economy class), then you probably have to compare with a revenue ticket which has at least some of the extra benefits.

GUWonder

fassy

KiwiRob

GUWonder

In SE, things seem to change on the tax front based on who is ruling the roost, but I would have to assume that if SJ's say on the matter is still current then it means there are Swedes whose SAS EuroBonus points earnings from work/business travel would be subject to taxation in SE as well as SJ points, at least based on how the points are used. Perhaps businessclass.se has some informed commentary on this matter? There has to be some Swedish tax lawyer or accountant on that site at least.