Taxation of protective drinks

Employers are required by law to take appropriate organisational measures to protect workers' health, including by providing protective drinks to reduce the harmful effects of summer heat. We review the labour law and tax aspects of this.

According to the Act on Labor Safety (Mvt.), if it is technically impossible to provide sufficient quantities and quality of air or climate in the workplace that is not harmful to health, appropriate organisational measures must be taken to protect the health of workers. If the corrected effective temperature in indoor and outdoor workplaces exceeds 24 degrees Celsius, health protection equipment must be used and protective drinks must be provided, and health and safety training must be given.

In outdoor workplaces, the protection of workers against heat must be ensured by technical solutions, work organisation, personal protection, opportunity to rest and protective drinks appropriate to the nature of the work and the working conditions.

The measures include the obligation to provide workers with drinking water (bottled water, bottled water in cylinders, mineral water) or flavoured, non-alcoholic drinks at a temperature of 14-16 degrees Celsius, as a protective drink, on request and at least every half hour. The sugar content of the drink, if not flavoured with artificial sweeteners, shall not exceed 4 % by weight.

According to the Act on Personal Income Tax (Personal Income Tax Act), among other things, the provision of health-safe working conditions under the responsibility of the employer in accordance with the provisions of the Mvt. is not taxable income, and protective drinks and health protection equipment provided as a non-monetary benefit are exempt from tax.

If the drink provided to employees is a protective drink due to the circumstances of the workplace, its supply is tax-free, so neither the employer nor the employee is liable to pay tax on it.

If the benefit does not meet the statutory requirements for a protective drink, e.g. energy drink, juice, coffee, etc.,ice cream, or other chilled food, it will not be tax-free but will be considered a certain specified benefit under the Personal Income Tax Act.

Under the Act on Value Added Tax (VAT Act), input tax on drinks is not deductible. Since the protective drink is also a beverage and the VAT Act does not contain an exemption rule for protective drinks, the prohibition of deduction also applies to protective drinks. Moreover, the taxable amount also includes the incidental costs incurred, so that, for example, VAT on the rental of a water dispenser or the cost of plastic cups cannot be deducted.

If the protective drink provided to employees is based on a statutory obligation, the cost of the protective drink can be charged as a material cost. If, on the other hand, the protective drink provided to employees is not based on a statutory obligation, the cost of the protective drink is included in other employee benefits.