Flexible remuneration is based on offering employees part of their annual remuneration in the form of a series of goods and services that may represent up to 30% of their gross fixed salary, through an express agreement to modify or novate their salary conditions.
Let's take a look at the Personal Income Tax Law. This name is used to designate Law 35/2006, of 28 November, on Personal Income Tax and partial modification of the laws on Corporate Income Tax, Non-Residents' Income Tax and Wealth Tax. Let us turn to article 42.
It defines what the income in kind. Let us translate the legal text into the language of mortals: it is the use, consumption or obtaining of any good, right or service that the company offers for free or for a lower price than it would pay on the market, as long as it is for the private use of the employee, and as long as the company does not directly give the money so that the worker can acquire it for himself, because in that case it would be monetary income.
Some income in kind has a advantageous tax treatment (detailed in Article 43), e.g. the transfer of a vehicle, or the rental of the dwelling, in both cases in accordance with the limits and regulations applied in each case, but in general they are valued at their normal market cost.
Goods or services that are NOT considered to be income from work in kind are those that are exempt from personal income tax (always according to “the conditions established by regulation”). By including them in the flexible remuneration, the advantage will be maximum because they do not count when calculating withholdings.
• El collective public transport, 1,500 per employee per year, with the aim of encouraging employees to use it to travel from home to the workplace. Indirect formulas are included, such as the Transport Ticket®.
• Training, if this is required by the employee's job. The delivery of computer equipment, as well as the expenses incurred to provide internet connection for employees, are considered training expenses, and therefore exempt from personal income tax.
- The use of property intended for staff social and cultural services. This refers to premises approved by the administration to provide the first cycle of early childhood education, or, as in the previous case, the contracting of this service with third parties, as in the case of childcare allowances as the Ticket Nursery® solution.
- Products delivered at discounted prices in company canteens or commissaries, or the indirect means of providing this service, i.e. the FOOD VOUCHERS as Ticket Restaurant®.
- The premiums, paid by the company, for work-related accident insurance or workers' liability insurance.
- The quotas of the health insurance with some limits: it must cover the worker (and may also cover the spouse and descendants) and the premiums must not exceed 500 euros per year for each of these persons. Any overpayment is payment in kind and is taxed.
- Shares or participations in the company or other companies of the group, if the total amount does not exceed 12,000 euros per year.
As always, the key is that these services are truly responsive to the needs of the individual.
