How do employee-chosen sports and cultural activities work in a limited company?

Employee-chosen sports and cultural activities are an employee benefit that allows a company to pay for an employee’s sports or cultural activities of their choice. The benefit, also known as a sports or recreational benefit, is currently tax-free up to €400 per employee per calendar year, provided that it is arranged in accordance with the Finnish Tax Administration’s requirements.

A limited company can also offer the benefit to an entrepreneur who works for the company and is a shareholder. If the company has other employees, the benefit must be offered to all employees under the same conditions.
 

What are employee-chosen sports and cultural activities?

Employee-chosen sports and cultural activities refer to a benefit intended for sports or cultural activities selected by the employee. The benefit may include, for example:

• a gym or other sports facility fee
• a fee for a sports hobby
• an admission ticket to a cultural event
• a designated payment instrument, such as Edenred or ePassi.

The benefit is intended for the employee’s personal use. It cannot be used, for example, to pay for a family member’s hobby or activity.

The maximum tax-free amount is currently €400 per employee per calendar year in total. The employee may freely divide the €400 between sports and cultural activities.
 

How to introduce the benefit

1. Decide how much the company will offer and which services can be paid for with the benefit.
2. Make sure that the benefit is offered to all employees under the same conditions.
3. Arrange the benefit either:
   • through a designated payment instrument, such as Edenred or ePassi, or
   • by having the limited company pay the expense directly to the sports or cultural service provider.
4. Keep track of the benefit used during the calendar year so that the €400 limit is not exceeded unintentionally.
    

Can the company reimburse an entrepreneur for a sports or cultural expense they paid themselves?

Not as a tax-free employee-chosen sports or cultural benefit. To meet the requirements for tax exemption, the limited company must pay the expense directly to the service provider or arrange the benefit through a designated payment instrument.

If the company reimburses the entrepreneur directly, the payment is not treated as a tax-free sports benefit. Instead, it is treated as normal salary.
 

How to add the expense to your UKKO account

1. Add the expense to your UKKO customer account as an expense by selecting “Add an expense”.
2. Attach the original receipt or invoice issued by the service provider. Make sure that the invoice or receipt is addressed to the limited company.
3. Enter the service provider’s details, including the company name and business ID.
4. Select “Service purchases” as the entry type and “Purchased for business use” as the expense category.
5. Enter the total amount shown on the invoice or receipt and select 0% VAT.
6. In the expense description, enter “Employee-chosen sports and cultural activities” and the name of the employee who received the benefit.
7. Mark the expense as paid by matching it with the corresponding bank transaction.

VAT on employee-chosen sports and cultural activities is not deductible in the accounts.
 

How does the benefit affect salary reporting?

When the benefit does not exceed €400 per year

If the benefit provided to an employee does not exceed €400 during the calendar year:

• the benefit is tax-free for the employee
• it does not need to be added to the salary calculation
• it does not need to be reported to the Incomes Register.

Tax-free employee-chosen sports and cultural benefits do not need to be reported to the Incomes Register.
 

When the €400 limit is exceeded

If the total benefit provided to an employee exceeds €400 during the calendar year, only the amount exceeding €400 is taxable salary.

In the UKKO service, you can calculate the owner-entrepreneur’s own salary and report any taxable benefits as part of the salary calculation. For this, you need:

• the total amount of employee-chosen sports and cultural benefits provided during the year
• information about the pay period to which the benefit relates, meaning when the entrepreneur had access to the benefit.

When the €400 tax-free limit is exceeded, create a new salary payment in your customer account and report the benefit as follows:

• If you have not reported benefits received earlier during the year on previous salaries:
  • report the total amount of benefits provided by your company during the year on the salary calculation.
  • The UKKO service will calculate the tax-free portion, and only the taxable portion will be reported to the Incomes Register. Withholding tax will also be calculated on the taxable portion.
• If you have already reported benefits received earlier during the year on previous salaries:
  • report only the amount of the new benefit on the salary calculation.
  • The UKKO service will automatically add together all employee-chosen sports and cultural benefits reported earlier and will report only the amount exceeding the tax-free limit to the Incomes Register. Withholding tax will also be calculated on this amount.

Please note that the UKKO service cannot be used to report only tax-free or taxable benefits for an entrepreneur. A cash salary must always also be included so that any withholding tax can be collected.

More information about calculating the entrepreneur’s salary is available in the article How do I pay myself a salary from my limited company in the UKKO Entrepreneur service?

Payroll processing for employees and the reporting of employee benefits must always be handled through a service such as Palkka.fi. These salaries or benefits cannot be reported through the UKKO service.
 

Frequently asked questions

Can the benefit be offered only to the entrepreneur in a one-person limited company?

Yes. In a one-person limited company, the benefit can be offered to the company’s only employee, provided that it is arranged as an employee benefit and the company pays the expense directly to the service provider or uses a designated payment instrument.
 

Does a tax-free benefit of €400 need to be reported to payroll?

No, not if the benefit does not exceed €400 during the calendar year. If the limit is exceeded, report the total benefit provided during the year to payroll, as well as the taxable portion exceeding €400.
 

Can I pay for the sports or cultural activity with my personal bank or credit card and have the company reimburse me?

Not as a tax-free benefit. The company must pay the expense directly to the service provider or arrange the benefit through a designated payment instrument.
 

Do I need to include specific information in the receipt description?

Yes. Enter “Employee-chosen sports and cultural activities” and the name of the employee who received the benefit in the expense description. This makes it possible to verify the total benefit in the accounts and monitor the annual €400 limit.
 

If you need help

If you are unsure whether an expense qualifies as an employee-chosen sports or cultural benefit, contact the Finnish Tax Administration for further guidance.

If you need help adding the expense to your customer account or reporting the benefit in payroll, contact the limited company service customer support at osakeyhtio@ukko.fi.