Ukraine Clarifies Tax on Employee Fuel Reimbursements
Cash reimbursed for fuel used in an employee’s private car is generally treated as a taxable fringe benefit. The employer must withhold income tax and the military levy.
An employer’s repayment of petrol or diesel costs incurred by an employee using a personal vehicle for business trips generally forms part of that worker’s taxable income. The treatment applies even when the journeys were made for company purposes, such as client meetings or document deliveries.
The State Tax Service reported the clarification on Thursday, October 22. Fuel receipts can substantiate the expense, but they do not by themselves provide a tax exemption for the cash reimbursement.
In 2026, the payment is subject to personal income tax at 18% and a 5% military levy. The employer acts as the tax agent, withholding both amounts, transferring them to the state budget and paying the balance to the employee.
No unified social contribution is charged where the fuel was consumed for the enterprise’s business activity. An employee receiving the reimbursement through the employer does not need to file an annual income declaration solely because of that payment.