Norwegian travel managers say they have no idea how to enforce a new government requirement for employers to report employees’ private use of loyalty points earned on trips for their company. The rule takes effect on Jan. 1, 2019. “Right now, I can’t see any solution to ease the pain. Our members are very frustrated,” said Norwegian Business Travel Association general manager Jan Henrik Ulvatne.
Private redemption of loyalty points on company-paid trips is treated as a taxable benefit in kind in Norway, Sweden and Denmark. Individuals are obliged to declare the value of such redemptions in their annual tax returns, but because tax authorities have no easy way to check, almost no one does.
As a result, the Norwegian government announced in its 2018 state budget that employers will be responsible for tracking and reporting points usage. The government forecast the measure will improve its tax take by 114 million Norwegian kroner (US$10.6 million). However, it has issued no guidance on the practicalities of employers introducing the reporting.
“Our members are unhappy because they are uncertain how to handle their responsibility for reporting,” said Ulvatne. "The authorities don’t understand the complexities of this. Loyalty [programs] have become more complicated over the past five years, adding more and more ways to earn points from buying groceries to cars.” As a result, said Ulvatne, it is impossible to determine whether points used for private redemptions were earned on company business or through private spending by the traveler.
Norwegian and Swedish public servants are forbidden to use points earned in the workplace for private travel. Ulvatne said that is an unsatisfactory solution. “Some companies are saying they might ban employees from earning bonus points, but membership brings important benefits for frequent travelers, including access to lounges and improved baggage allowances. These aren’t just fringe benefits; they make travelers’ lives easier. For those who travel a lot, this could make life more difficult and mean they will need to pay for things they could have had for free.”
Even ordering travel management companies to hold no loyalty program details in traveler profiles would be futile, Ulvatne added. Travelers could simply claim the points on check-in at a hotel or airport. Such a measure could also tempt employees to book trips privately instead of through authorized company channels.
Swedish Business Travel Association general manager Lotten Fowler said the Swedish government looked several times at tracking loyalty point usage but failed to find a practical solution. A Swedish court blocked one attempt to force airlines and other loyalty program providers to hand over data on how much members have earned.