Flexible remuneration offers companies the chance to increase their workers’ net salary without increasing payroll costs. Employees can replace part of their monetary remuneration with products and services, thus having access to favourable prices and paying less tax.
In this way, everyone benefits: companies, because they can improve their workers’ conditions without incurring heavy expenditure, and employees, because they can access products and services with tax benefits.
Conditions for flexible remuneration
There are a series of limits and conditions regarding flexible remuneration, which must be taken into account:
Remuneration in kind cannot be imposed unilaterally by the company. The employee decides voluntarily how to receive his/her gross remuneration through services with tax advantages.
Employees can receive up to 30% of their total gross salary through flexible remuneration.
The worker can receive up to €11 per day (on working days) in restaurant vouchers, which are exempt from Personal Income Tax withholding.
Transport allowances are subject to a limit of €136.36 per month (€1,500 per year), provided that this does not represent more than 30% of the employee’s annual gross salary.
The premiums paid by the company for employees’ medical insurance are tax-deductible up to 500 euros per insured person.
Lastly, the full childcare allowance can be deducted. There is no maximum, although the total for this amount and all other flexible remuneration allowances cannot exceed 30% of your annual gross salary.
Types of flexible remuneration
The flexible remuneration plan consists of various benefits for the worker:
Childcare allowance. This is a form of flexible remuneration for employees with children enrolled in the first cycle of children’s education (up to 3 years), which helps staff improve their work-life balance through a childcare service with tax benefits.
Restaurant vouchers. The employee can use restaurant vouchers, which are exempt from Personal Income Tax withholding, to pay for meals during the working day.
Transport allowance. This covers part or all of the cost of public transport that many employees have to meet to travel to work every day.
Medical insurance. Employees, together with their spouses and descendants, can have private medical insurance with tax benefits.
The main reasons why it is worth offering a flexible remuneration plan
It helps to attract talented workers and build loyalty
With flexible remuneration, employees are rewarded with an “emotional salary”, a factor recognised by experts in labour relations as fundamental in attracting the best professionals and keeping them.
This type of incentive improves workers’ lives, as they feel cared for and valued, thus creating a lasting bond with the company.
It is financially beneficial
Remuneration in kind is a way of compensating employees and improving their conditions without major financial outlay by the company. It also leads to significant tax savings for the employee.
It improves well-being in the workplace
An employee who is helped to achieve a better work-life balance while seeing his/her outgoings reduced thanks to tax benefits, becomes a satisfied and motivated worker.
This type of incentive helps to improve the working climate and the wellbeing of staff, leading to increased employee motivation and greater individual and collective productivity.