Published by the Federal Revenue Service of Brazil (RFB) at the end of last year, Cosit Opinion Letter 63/22 answers a question about the legal nature, for tax purposes, of the sums paid to employees to cover expenses with internet and electricity during working hours, in a telecommuting regime.

The requesting taxpayer informed the RFB that the amounts paid were intended to reimburse expenses incurred by employees due to the adoption of a differentiated work regime (telecommuting). It argued that the payment was not intended to reward work, but to compensate the employee for the expenses incurred by him due to a change in place of work.

In response to the inquiry, the RFB concluded that the amounts paid to reimburse expenses incurred by employees for internet and electricity consumption resulting from the provision of services under the telecommuting regime should not be included in the calculation basis of social security contributions and withholding income tax (IRRF).

The RFB, however, added that, in order to establish the compensatory nature of the amounts received, the employee must prove, through proper and suitable documentation, the amounts spent by him.

Regardless of the RFB's understanding, it must be remembered that paragraph 2 of article 457 of the CLT provides for a per diem, which consists of an amount paid by the employer exclusively to cover the cost of the expenses incurred by the employee in the performance of his work activities.

In other words, it is not actual reimbursement of expenses, but rather advance payment for the expenses that the employee will have to bear for his activities. For this reason, it is not necessary to submit receipts or proof of expenses incurred by the employee.

This condition would apply only to the reimbursement of expenses, since the latter consists of reimbursing the employee for expenses generated by his work activity. In this case, proof is required, because it is a payment for an amount already spent by the employee, and not an allowance for the employee to cover expenses.

In our understanding, the RFB mixed up the concepts of a per diem and expense reimbursement when giving its answer.

The inquiry submitted to the RFB was, in fact, regarding payment of a per diem, which, according to the CLT, is compensatory in nature. In these cases, the employee cannot be required to prove the amount spent. This requirement is only applicable in the case of reimbursement of expenses, which was not the case.