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.
• The Public transport, up to €1,500 per year per employee, with the aim of encouraging them to use it to travel between home and work. Indirect methods are included, such as Ticket Transporte®.
• Training, if this is required by your job. The provision of computer equipment, as well as expenses incurred to provide employees with internet connections, are considered training expenses and are therefore exempt from income tax (IRPF).
• The use of property intended for social and cultural services for staff. This refers to premises approved by the administration for providing the first cycle of early childhood education, or, as in the previous case, contracting this service with third parties, as in the case of childcare assistance as the Nursery Ticket® solution.
• Products supplied at reduced prices in company canteens or staff shops, or indirect methods of providing this service, i.e. the FOOD VOUCHERS as Ticket Restaurant®.
• Premiums, paid by the company, for accident insurance or employee civil liability insurance.
The instalment payments of health insurance with some limits: it must cover the worker (and can also cover their spouse and descendants) and the premiums must not exceed 500 euros per year for each of these individuals. Anything paid in excess will be payment in kind and subject to tax.
Shares or holdings in the company or other group companies, provided the total does not exceed €12,000 annually.
As always, the key is that these services truly respond to the needs of the individual.
