What is and what is not payment in kind?

I would like to know what is meant by payment in kind, What I can offer my employees, how it is taxed (if at all)... If you are considering this question, read on because we are going to explain this concept so that you are clear about it.

Wages in kind are considered to be remuneration, other than money, based on goods or services that benefit or are of interest to the employee. It is a widespread practice in many companies, but it should be borne in mind that this “salary” may never exceed 30% of total salary payments.

Another important aspect to bear in mind about this type of employee remuneration is that some of these products or services considered as payments in kind are taxed under the Income tax return.

Below we distinguish between those who must abide by the IRPF regulations and those who do not. This is a very important aspect to bear in mind when filing your income tax return in order to avoid committing any of the following errors corporate accounting errors.

• First of all, remember that you must make a payment on account on the value of the remuneration in kind, which will be charged to the employee.
• As a company, you must calculate and pay it to the Tax Agency along with the rest of the withholdings. In this way, the worker will be able to see the amounts reflected in their tax data to make their Income Tax Return.

The benefits of payment in kind

Undoubtedly, the in-kind wage is a model for flexible compensation which allows workers to obtain tax benefits and save on their regular expenses.

In addition, as a company, you will certainly be able to obtain better conditions for certain products and services for your employees.