Products that can be included in a plan of flexible compensation These are those which Article 42 of Law 35/2006 of the Personal Income Tax (IRPF) recognises as tax-exempt benefits in kind. The most common are:
The total value of the plan may not exceed 30% of the employee’s gross annual salary. In this article, we set out the details of each product, their legal limits and the conditions that must be met to maintain the tax exemption.
The Article 42 of Law 35/2006 on personal income tax defines benefits in kind as «the use, consumption or acquisition, for private purposes, of goods, rights or services free of charge or at a price below the normal market price, even if they do not represent an actual expense for the grantor.» In other words, anything that the company provides to the employee in the form of a good or service instead of money.
Some benefits in kind tribute as income from employment (with a specific valuation regulated in Article 43 of the LIRPF, for example the assignment of a vehicle or the rental of housing with their respective limits). Others, on the other hand, are exempt totally or partially from Income Taxare those that add the most value when included in a flexible remuneration plan, because they do not count towards the monthly tax calculation and increase the employee's net salary.
The total flexible remuneration package cannot exceed 30% of gross annual salary of the employee, as established by Article 42 of the LIRPF itself. If you want to understand in depth how flexible remuneration works and how to implement it, you can consult our A complete guide to flexible remuneration.
Meal vouchers or cards are exempt from income tax up to €11 per working day. Assuming effective working days, the typical tax-exempt annual amount is around €2,420. These can be used in restaurants, cafes, and food establishments affiliated with the provider's network.
More information on how it works and accepted establishments at Ticket Restaurant.
The amount allocated to collective public transport is exempt. up to €136.36/month (€1,500/year). This applies to the usual commute between the employee's home and the workplace: season tickets for the underground, bus, suburban trains, and similar services. Travel in private vehicles or taxis is excluded.
The service can be contracted through indirect methods such as Edenred Mobility, which centralises benefit management.
The aid intended for childcare for children aged 0 to 3 years is 100% is exempt from income tax, with no quantitative limit. It is one of the products with the greatest tax saving potential in the plan. It applies to centres approved by the competent authority to provide the first cycle of early childhood education, contracted directly by the company or through indirect methods such as Edenred Guardería.
Company-paid private health insurance premiums are exempt Up to €500 per year per beneficiary. The coverage can extend to the spouse and descendants, meaning a family of three could benefit from up to €1,500/year exempt. In the event of employee disability or that of a family member included in the policy, the limit rises to €1,500/year per person.
Amounts exceeding these limits are considered taxable benefits in kind. For more details, please see Health insurance.
On-the-job training is exempt unlimited, provided that it is directly related to the employee's duties. The exemption also covers the provision of IT equipment and internet connection expenses when used for training purposes.
More information about training management within the plan on Edenred Flex.
In addition to the above, Article 42 of the LIRPF lays down other in-kind benefits with favourable tax treatment:
Regardless of the products chosen, the total amount allocated to the flexible remuneration plan cannot exceed 30% of gross annual salary of the employee, as established by Article 42 of Law 35/2006 on Personal Income Tax. Any excess above that percentage is taxed as ordinary employment income and loses its tax exemption.
For an employee with a gross annual salary of €30,000, this amounts to a maximum of €9,000 that can be allocated to the plan as a whole. The specific allocation between products depends on each employee’s needs and their individual limits: the amounts allocated to Ticket Restaurant, Edenred Mobility, Edenred Guardería, Health Insurance, Training and shares are added together to ensure that the overall 30% limit is not exceeded.
Not all products suit all employee profiles. The key to a good flexible benefits plan lies in offering a varied catalogue that fits the real needs of the workforce:
To design a comprehensive step-by-step plan, consult our guide on How to implement a flexible benefits plan Oh, hello Advantages and examples of flexible remuneration to see concrete cases.
Human Resources professional with a solid track record in talent management and a strong commitment to optimising the employee value proposition. Throughout my career, I have had the opportunity to develop my expertise in international environments and consulting firms, specialising in talent attraction and retention through advanced strategies such as flexible remuneration. Currently, as Key Account Manager (KAM) at Edenred, I collaborate closely with major clients to design and implement strategic compensation and benefits solutions that enhance corporate well-being and organisational engagement.
