Entrepreneur's Lunch Benefit - Bypassing Epassi, Edenred, etc.

[Volvocarl]

Greetings

I am an entrepreneur.

I want to have lunch at a restaurant.

I do not want to buy payment instruments from Edenred, Smartum, Epassi, or any other company, because I already have a credit card and cash.

In my opinion, using these companies eats away at the tax benefit for a small business. Plus, it’s too much hassle.

I find these companies somewhat repulsive because they were born out of the Finnish Tax Administration’s (Verohallinto) complicated calculation formulas. In themselves, they are clever inventions, but this should not be the case at a societal level.

If I, as an entrepreneur, want to get a lunch benefit, calculating this is disproportionately difficult relative to the value of an individual benefit, considering the costs of payroll calculation. It’s a bit like the phenomenon where you need a separate tag for car charging – absurd.

At some point, I tried to record the prices of lunches in Excel and calculate the amount of tax-free compensation from this once a month. This caused a lot of pain for the accountant and the tax authority.

Has anyone figured out how to 1) as easily as possible and 2) without using these “intermediate payment instruments” 3) in any restaurant, i.e., without any contractual dining, get the tax benefits of the lunch benefit for the company + employee? Please tell me how you have done this.

Strength!

[Volvocarl]

I’m still replying to my own message with a new addition.

I wonder why no one has made a fuss about this. We are like sheep.

The bureaucrats at the Tax Administration calculate the value of the lunch benefit annually.

As a result, the prices of lunch meals increase annually.

There would be an easy solution to this at a societal level. I’ll give it here for free:

The employer can give the employee 2 euros per lunch tax-free, i.e., a total of 40 euros per month. Receipts are not needed. The expense is tax-deductible for the company.

Such a solution would result in the following:

1. the price of lunch meals would drop, or at least the increasing effect caused by bureaucracy would be removed,

2. the number of bureaucrats at the Tax Administration could be reduced,

3. Epassi, Smartum, Edenred would go bankrupt and

4. entrepreneurs would have more time for their actual business.

Power!

[Deep_Value]

Once you have a credit card and cash, do you buy lunch with the money you’ve earned completely normally?

No, you wanted to get the tax benefits of a lunch benefit. How else.

If you want to work the system through the company, you deduct each lunch separately by enjoying it on a business trip (the accountant will enjoy that), in which case you can deduct it. Or you offer yourself a lunch benefit either as a fringe benefit or as a lunch deduction.

Lunch benefit as a fringe benefit:
The employer offers the employee a lunch benefit of 200 € per month. The taxable value of the benefit, 0.75 x 200 € = 150 €, is added to the employee’s salary. The employee pays tax on the 150 € according to their personal tax percentage. The employer pays 200 € for the benefit + employer contributions for 75% of the amount (e.g., 150 € x 22.5% = 33.75 €).*

Lunch benefit as a lunch deduction:
The employer offers their employee a lunch benefit for 21 working days per month. The employee pays 21 x (0.75 x 13.50) = 212.63 € for the benefit, which is deducted from their salary. The employer pays only 25% of the benefit, i.e., 21 x (0.25 x 13.50) = 70.86 €, and can deduct this in taxation.

[Kiljuhanhi]

Daily allowances are the easiest solution, if conditions are met. And mileage reimbursements for driving.

@Volvocarl

I wonder why nobody has made a fuss about this. We are like sheep.

Because a better outcome is achieved by using one’s working hours to increase income instead of these few-euro tax savings?

[Tuohenpolttaja]

I haven’t bothered to deal with lunch benefits myself precisely because of those high “intermediation fees” that the companies you mentioned charge, and the benefit isn’t that significant in euros. Before entrepreneurship, I also had that benefit in use, and previously, you could easily pay larger sums with lunch vouchers, but that’s probably not possible anymore. Therefore, I’ve found the easiest and cheapest solution to be to primarily record all receipts as client meetings. You can deduct the VAT from lunches and also get a 20% tax benefit. I personally go out for lunch perhaps 100-150 times a year, so it doesn’t accumulate a huge sum. I always pay for lunches with my own card, not the company’s, and I make an “expense claim” perhaps once or twice a year, collecting all those saved receipts for it. I create one Excel sheet from them and attach the receipts. If one gets forgotten, it’s not that big of a deal. Your accountant would surely be quite happy with a similar solution and would have a very easy time. These are such small sums that the tax authorities are unlikely to be very interested in whether everything is truly client meetings or not. These are some of the advantages of being a sole entrepreneur, but on the other hand, they support local restaurant businesses, so society probably comes out well ahead in this. I pay at least 40k€ in taxes annually (+50k€ in VAT), so I don’t feel too guilty about these.

[Deep_Value]

I would like to understand even better what makes, for example, Edenred’s business model ”repugnant”?

Companies operate within the framework of legislation and support employee well-being.

Edenred, Smartum, and ePassi offer useful services that ease employees’ daily needs, such as lunch, travel, and sports benefits. These benefits promote well-being and encourage healthy lifestyles. Tax benefits make these services financially attractive to both employers and employees.

Should these services be offered without a margin? If the price is too high, the benefit can be offered without any vouchers. In many countries, legislation also limits the margin.

What is the biggest sticking point there? The problem isn’t that one partially cheats on tax deductions by marking every lunch as an entertainment expense, but that a company operating entirely according to legislation acts ”repugnantly”. Should the legislation regarding benefits be changed concerning taxation? Is legislation the problem here?

[jps]

@Deep_Value

The problem is not that one half-cheats on tax deductions by marking every lunch as an entertainment expense

As a meeting and negotiation expense, not an entertainment expense, is more tax-efficient. It’s not worth recording anything other than drinking alcohol as an entertainment expense.

[Monopoly_of_bees]

@Volvocarl

There would be an easy solution at the societal level. I’ll give it here for free:

The employer can give the employee 2 euros per lunch tax-free, i.e., a total of 40 euros per month. Receipts are not needed. The expense is deductible for the company.

This already exists in the current taxation system, as various deductions are automatically made from earned income in state and municipal taxation. Without asking and without receipts.

The easiest way, therefore, is to state that the lunch benefit is already included in these and to remove the lunch benefit as a separate deductible item.

[Tikii]

If the conditions are met, then paying a tax-free meal allowance is probably a good solution?

[MoneyWalker]

@Volvocarl

Has anyone figured out how to 1) as easily as possible and 2) without using these “intermediate payment methods” 3) in any restaurant, i.e., without any contractual meal arrangements, get the tax benefits of a lunch benefit for the company + employee? Tell me how you have done this.

Mileage allowance and daily allowance - vero.fi
“If you do not receive a daily allowance, you can instead receive tax-exempt meal allowance. The prerequisite is that due to a business trip, you do not have the opportunity to eat at your usual dining place. The maximum amount of meal allowance is 13.25 euros per day in 2025. (In 2024, the amount is 12.75 euros).”

[Volvocarl]

I want my company to receive the appropriate deduction and me, as an employee, to receive the tax-exempt compensation I am entitled to. This should not require the use of third-party payment instruments.

I don’t want to play games. I don’t want to report inaccurate information in accounting and risk being found guilty of an accounting offense, tax fraud, or similar. Such actions would lead to the end of my career in my field and would therefore be an unreasonable risk. I am referring here to your later comment that “there is no problem with cheating on tax deductions” (6th message in this thread). I have not done such a thing, so you should be careful what you write or imply.

The problem with utilizing the tax benefit is its practical implementation. To put it simply, I first tried to write this by going through the Finnish Tax Administration’s (Verohallinto) guidance on the taxable value of fringe benefits. I was overwhelmed.

That is the core of the problem.

I will try to explain this in another way.

Income Tax Act, Section 64, Subsection 1:

“A fringe benefit received from an employer is taxable earned income and is valued at fair value. The Finnish Tax Administration (Verohallinto) annually determines the calculation bases for the fair values of fringe benefits.”

At this stage, everything is still clear.

Then comes the Act on the Finnish Tax Administration (Verohallinto), Section 2, Subsections 1 and 2:

"The task of the Finnish Tax Administration (Verohallinto) is to carry out taxation, tax supervision, collection, recovery, and accounting of taxes and payments, as well as the protection of the rights of tax recipients, as separately stipulated.

The Finnish Tax Administration (Verohallinto) must promote correct and uniform taxation and develop its service capability."

Okay. It still seems quite simple, but then comes - drumroll - THE FINNISH TAX ADMINISTRATION’S (VEROHALLINTO) GUIDANCE ON CALCULATING THE TAXABLE VALUE OF FRINGE BENEFITS. link: Luontoisedut verotuksessa - vero.fi

If you are a small entrepreneur, or perhaps even a larger one, who is interested in your company’s financial situation, you know how to question the rationality of these calculation formulas. Try to calculate a month’s meals first from the company’s perspective, then reconcile it with employee payroll reports, and then add the appropriate employer contributions. Complicated!

Okay. Someone has come up with a solution to this problem. At least the following companies offer a solution:

Epassi Finland turnover in 2023: approx. 430 million euros.
Smartum: turnover difficult to find (hidden?), already in 2015. approx. 90 million euros
Edenred: turnover approx. 23 million euros.
(Are there probably other similar companies?)

Who do you think pays the turnover of these companies? I don’t know what you think, but in my opinion, you shouldn’t have to pay even a part of it, not to mention accounting costs, bureaucrats’ salaries, hassle, etc.

I will not comment on whether the meal benefit is a good or bad thing at the societal level. The legislator and apparently the majority of Finns support the benefit.

What I oppose is bureaucracy. Bureaucracy is particularly unnecessary if it leads to the creation of new businesses.

In this matter, a simple thing has been made so complicated that a need for these companies has arisen. I don’t blame these companies. Their operations are certainly legal. The fact, however, is that these companies are intermediaries. They always take a small slice of your, my, our, their tax benefit. This intermediation is made possible by - drumroll - the bureaucrats of the Finnish Tax Administration (Verohallinto).

So, if you support the meal benefit in principle, you should absolutely oppose its current implementation.

[Deep_Value]

@Volvocarl

I want my company to receive the appropriate deduction and me, as an employee, to receive the tax-free compensation due to me. This should not require the use of third-party payment instruments.

Excellent. It doesn’t, you can receive/pay the lunch benefit either as a fringe benefit or as a lunch deduction, as I described above. This does not require purchasing any service.

@Volvocarl

I don’t want to play games. I don’t want to report inaccurate information in accounting and risk being found guilty of an accounting offense, tax fraud, or similar. This would lead to the end of my career in my field and would therefore be an unreasonable risk. Here I touch upon your later comment that “there is no problem with cheating on tax deductions” (6th message in this thread). I have not done such a thing, so you should be careful what you write or imply.

Brilliant. However, look at other answers, some of which venture into a grey area if every lunch is recorded, for example, as a client meeting.

@Volvocarl

The problem with utilizing the tax benefit is its practical implementation. To put it simply, I first tried to write this by going through the tax administration’s instructions on the taxable value of fringe benefits. I was overwhelmed.

I understand this. The same applies in practice to car benefits, housing benefits, or any other deductible benefit. Or taxation in general. These small details and other deductions are sometimes difficult and burdensome. I understand this. It would be nice if taxes didn’t have to be paid at all. That would suit me perfectly. The lunch benefit has now been decided to be 25% tax-free. OK, I’ll live with that.

@Volvocarl

Okay. Someone has found a solution to this problem. At least the following companies offer a solution:

Epassi Finland revenue in 2023: approx. 430 million euros.
Smartum: revenue difficult to find (hidden?), already in 2015. approx. 90 million euros
Edenred: revenue approx. 23 million euros.
(Are there probably other similar companies?)

Who do you think pays for these companies’ revenue? I don’t know what you think, but in my opinion, you shouldn’t have to pay even a part of it, let alone accounting costs, bureaucrats’ salaries, hassle, etc.

Edenred’s LTM revenue is 2.5 BILLION. Their customers generate their revenue. If you don’t want to use similar services, you pay for the lunch deduction or fringe benefit directly without any intermediaries. I myself use many “intermediaries” very happily, for example, Visa and Mastercard for payments, an accountant for accounting. I have sometimes ordered lunch with Wolt, and a cleaner has sometimes visited my home. I have happily paid for every intermediation.

Regarding Edenred and similar services, the added value can be thought to consist of, for example:
-facilitating the management of employee benefits
-tools simplify expense reporting
-companies can identify unnecessary expenses and improve cost-efficiency with real-time data and reporting
-rewarding: offers companies a platform to customize incentive systems for employees and retain the best employees better
-streamlining administration: digitalization of processes frees up time for companies’ core operations

Someone might even pay a little for these?

[Dollarijanis]

@Tuohenpolttaja

Therefore, I have considered the easiest and cheapest solution to be to book all receipts as customer meetings. You can deduct VAT from lunches and also get a 20% tax benefit. I myself have lunch perhaps 100-150 times a year, so it doesn’t accumulate a very significant pot. I always pay for lunches with my own card, not the company’s, and I make an “expense claim” perhaps once or twice a year, collecting all those saved receipts. I make one Excel sheet from them and attach the receipts. If one is forgotten, it’s not that serious. Your accountant would surely be quite satisfied with a similar solution and would have a very easy time. These are such small sums that the tax authorities are unlikely to be very interested in whether all of them are actually customer meetings or not.

It certainly depends a lot on the nature of the business and, for example, the number of customers, but I am quite sure that in the event of a tax audit, 150 customer meeting lunches a year in a sole proprietor’s accounting would definitely stand out. I could imagine that it would at least be required that the names of customer companies and individuals be scribbled on the receipts. It is, of course, a completely different matter that the probability of a tax audit is very small if the company’s operations otherwise appear normal to the tax authorities and obligations are handled properly. In that sense, it’s only up to one’s own audacity (and the accountant’s attitude) what all one dares to deduct as expenses.

[Volvocarl]

Even snake oil salesmen manage to sell their products. Many businesses are based on people’s gullibility / being misled / being guided, etc.

Your writing is quite skillful lobbying on behalf of these intermediary companies.

However, your writing contains a few errors and misleading statements, but I will return to them later.

This wasn’t all.

[RimaPoika]

@jps

It’s more tax-efficient as a meeting and negotiation expense, not as an entertainment expense. It’s not worth recording anything as an entertainment expense except for drinking alcohol.

A circle of five entrepreneurs who negotiate once a week, taking turns to pay.

Sometimes reaching an agreement requires a lot of polishing and mediation for long periods…