Smartphones, tablets further distinguished

Distinction between smartphones and tablet computers

With the current generation of mobile phones you can do much more than simply make calls and text message. The difference between ‘mobile communication’ and ‘computer’ is rapidly becoming blurred. Benefitting to the consumer, but confusing for the tax authorities. In the law different rules apply to computers and mobile phones.

The provision of a mobile phone and similar communication means (i.e. a smartphone or BlackBerry) falls under work-related costs if the employee uses it for business more than 10% of the time. A computer, however is only tax-free if it remains at the workplace and is used for business more than 90% of the time. Therefore it is preferable to fall under the ruling for mobile phones as much as possible. Under the old rules for expense reimbursements and benefits other similar conditions apply.

Recently the Secretary of Finance further sharpened the distinction between a computer and a cell phone. It was already known that smartphones such as BlackBerrys and iPhones may fall under the term ‘mobile communication’. But now the Secretary has stated that the tax office will consider as mobile phones only devices with a screen no larger than 7 inches (17.78 cm) in diagonal. The display and input capabilities for these devices are too limited for extended use as a computer. However employers are of course free to demonstrate that a specific device with a larger screen, such as a tablet, is just a communication tool.

So-called pocket PCs, mini-notebooks, netbooks, e-readers and navigation devices do not fall under the term ‘communication tool’. Such devices are suitable for either general purpose or for a specific use other than communication. These devices fall under the rules for computers and the like. The Secretary expects the distinction between computers and communication tools to blur further. He will have to wait till then to see if further adjustment needs to be made to the tax laws.