fassy

Without going to far OMNI, well.. these types of discussion are typical left/socialist/social-democrat envy inspired discussions. Why does someone who travels for work and enjoy all that fun also get points to spend on top? That is sooooo unfair.

BS. None of those people see that travel for work most of the time is hard work and no fun. And that you are giving up time to be with family and friends or do stuff you really would enjoy.

Anyway... even in Germany they found a practical solution which was that LH just pays a flat tax on mile earned to the tax authority.

Sure, when the tax man can press a couple more dimes out of the hard working middle class....that's what they do. Under frenetic applause.

I guess it really comes down to see what valuation they put on the miles/points. Also how long it will take until they aim at all other loyalty programs, like hotels, credit cards, rental cars etc.

And also, what penalties the first victims caught will get. In theory it can be anything, from just $$$ to jail for tax evasion, right? But I guess, if you ever tried to report miles or points as benefit to the tax authorities... they wouldn't have a clue how to value them. Which goes back to question #1 ....

vanillabean

European mileage plans are still sucking on their pacifiers, and of course the countries in question are already having serious talks about tracking down flyers that don’t report their points when filing taxes? That’s not a concern often expressed over here.

nacho

I guess Isabella Lovin might be worried. For those who are not living in Sweden - she was the vice PM of Sweden and the head of the Environmental Party. There were reports saying that she violates rules about government travel by flying C instead of Y for various meetings.

I can also think of a dad from my kids' previous school working for a packaging giant in Lund saying that he flies C 300 days a year on company's dime and he pockets tons of mileage for his personal holidays. I'm sure he didn't get his mileage deducted from his salary.

nacho

Well, Mr. has worked for a few companies and they either fly LCC - maybe DY cash points or dirt cheap Y which gives very little (he hardly has any colleague that flies with him that has status of any kind). I doubt that Skat would bother with trying to track those down.

CPH-Flyer

Ah yes, I forgot that one. Germany did already address the issue.

I am sure that if the tax authority get their way here, other loyalty programs are coming up. But I think they will struggle to get information from the ones that are based outside of the EU and associated countries.

CPH-Flyer

I think this is a very European topic. It is also not a topic that is being discussed over here.

fassy

For sure not. How would they do that? Again, what basis should they use? The only fair option would be the value reported by SK in their filings... which I couldn't find. They only report the total liability not the number of points it translates to, e.g. for 2019:

Not sure why SK isn't reporting it like LH does:
Also interesting:
Interesting here is... assuming Skatteverket will assert a fixed valuation per point. What do they do if that value changes as SK is indicating? Or if SK goes into the next big devaluation round?

I guess, the only way they could go would be to disallow any point earnings not paid by private money.

fassy

Well, that would be up for discussion in front of the court but the law says (using a terrible Google Translation):

Discounts that are provided for proven customer loyalty and that are available, among other things. in the aviation and hotel industry are taxable if they are used for private use. A basic precondition for taxation is that the recipient's employer or client has paid for the goods or services that entitle to the discount or that the benefit can for other reasons be regarded as an outflow of the service. This applies to e.g. if the employee collects bonus points due to business trips paid for by the employer. See also section 6.1.

The time of taxation occurs when the loyalty discount etc. is used (Bill 1996/97: 19 p. 77).

I think that is pretty clear, you earn the discount (and points are a discount in some sense, you discount the ticket you buy) at some point and you use it later. If they want to challenge that, they would need to change the law. Also it avoid the issue of how to deal with devaluations of even expiry of points.

Fredrik74

That on the other hand makes it easier to charge a price for the rewards ticket. When did you fly instead of during which period did you earn the points?

fassy

True, but what price tag do you put on such a flight? An Award ticket comes with its own ticket rules which do not compare to any other ticket class. And while e.g. it might be that on a day of travel only full fare Y was available, you were lucky enough to also get an X. What do you pay now? Taxes calculated against fare for full fare Y? If the next day or day before T class was open but no X... well... who on this earth would have gone on the day and pay 10 times a much in cash?

I guess, then a next question needs to go to SAS: What is the sales value of a X-ticket on that day? Even better if it is a Star Alliance award. Or an upgrade vom Y to J?

Fredrik74

I would hope that these questions would put and end to the investigation but I'm not sure that's what going to happen.

Im a new user

https://lagen.nu/prop/1996/97:19#sid77-text

And should you also look at other flights? You can only book Star Alliance flights with X availability if you wish to book with points, but you might have booked a Oneworld or Skyteam flight, or even a Ryanair flight, if you had used cash. Remember that the points heavily limit which flights you can book.

Is lounge access from status taxed as a discount of the fee to buy lounge access?

fassy

And not to forget you are forced to book whenever the availability shows up, e.g. for LH F need to wait until a few days before travel while using cash, you could have booked months in advance and safe a lot.

But I guess these kind of discussion won’t hold up in court. They will say: Well, your loss. If booking earlier or a different airline with cash would have been better, why didn’t you do so?

The hard thing they will struggle to determine is the real benefit value. I suppose there are two options: Use the per point value as defined by SK in their financial statements or request the fare paid. Somewhere in the SK accounting they have to book the awards against spending, right?

GUWonder

The actual fare SAS has paid UA for some ORD-MSP award flight in economy class would be considered stunningly low by many. And even what SAS has paid UA for say IAD-LHR award space in business class could be considered stunningly low by many.

Over the past 10-20 years, the value I place on frequent flyer tickets has been dropping tremendously because of how the award availability is increasingly restricted in such a way as to make award travel a sort of inconvenience over buying regular paid tickets. And then there are times when I'm forced to pay up for a premium cabin award because the economy cabin award I want isn't available for miles (or the economy cabin award space costs even more miles than the premium cabin award space), and that premium cabin travel I consider to be a much worse value since it's eating up my miles in a way that diminish my ability to travel more for the same outlay or less.

[sarcasm]So where will the frequent flyer program customers try to shelter the frequent flyer program earnings from tax liability? And how soon can we expect the OECD FATF to come up with a blacklist of havens exploited by frequent flyer program users? [/sarcasm]

Airlines that want to get creative will do so if they think it helps them get the business they want. For example, maybe an airline will offer the flyer a chance to use personal money to buy miles/points at a very cheap price tied to the travel on the employer/client-paid/reimbursed ticket. The airline could even discount the purchase price per mile/point based on the characteristics of the ticketed flights flown, so maybe a more expensive flight segment means a greater discount on the price to buy the miles/points.

Taxing lounge access from status? In some circumstances that could be a weird one to try to tax if the access is not based on a paid lounge membership or pay-per-entry lounge program. There are plenty of times where people get special lounge access for free because of their perceived status by the airline. Tax that too even if it's not a lounge that has an entrance fee? Does that apply to people who get SK*G directly from SAS management without it being tied to paid tickets in the person's name?

fassy

indeed, if SKV would pick on me... that would be my first line of defense. Get the cash equivalent value SK paid and tax me on it...