Undoubtedly, flexible remuneration is one of the key aspects of the human resources sector.
In times when it is not possible to increase an employee’s salary or assume more costs in the company, adopting flexible compensation plans can be the best way to attract and retain talent.
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What is flexible remuneration or salary in kind?
We could define flexible remuneration or salary in kind as the offer of service, right or to all the workers of a company for free or at a cost below the market price.
Flexible remuneration is a remuneration system that allows the employee to decide what part of her salary she wants to receive in money and what part in products or services.
It allows the company to offer better conditions and remuneration to its employees without the need to incur costs or wage increases in most cases.
Usually, the employee is the one who bears the cost of this remuneration or benefits within his salary, being able to obtain interesting tax reductions. In this way, the employee can see how his salary increases without incurring an expense for the company.
Differences between flexible remuneration and benefits
It is important to know the differences between flexible or in-kind remuneration and benefits since it is common to include both terms under the more generic and probably more neutral word benefits.
But, as you already know, compensation in kind helps the employee get more out of their salary while the benefits are more linked to the company’s human resources policy and employer branding.
As a company, you can drastically improve your image and customer satisfaction by using both benefits and a flexible compensation plan.
You can see all the information published by social security regarding compensation in kind in this scheme
- Remuneration in kind: the remuneration received by the worker in the form of products or services related to their work instead of money https://www.taxfortress.com/.
- Social benefits: are those products or services that the company itself offers the worker regardless of their salary in money.
- In this case, it is the company that pays in full for said products or services that normally depend on the collective agreement to which the company is subject. Therefore, the benefits are more linked to the company’s human resources policy.
- Flexible remuneration: part of the remuneration is in money and the other part is in kind.
Therefore, from these concepts, we can deduce that one of the two components of flexible remuneration is remuneration in kind and that it differs from the social benefit in that it allows the employee to choose which part of his salary he will receive in kind.
Examples of salary in kind and benefits
Employee Health Insurance
The premiums paid by the company for medical insurance for its employees can be deducted in the Corporation Tax up to 500 euros per insured worker.
For employees who receive medical insurance as part of their salary (which can also be contracted for their spouse and descendants), they will not have to pay taxes for this concept up to an amount of 500 euros per year per beneficiary, since it is not considered income to tax effects.
More and more companies understand the advantages of promoting healthy lifestyles among their employees that strengthen their mental and physical health.
At Factorial we offer the possibility of contracting subscriptions to more than 1,000 gyms throughout Spain for the employees of a company. Part of the fee paid by the company can be deducted from the Corporation Tax.
Restaurant tickets and subsidized dining rooms
The worker can use the restaurant or dining room tickets during their lunch break.
Up to €11 per day (on business days) would be exempt from personal income tax withholding for the worker.
Offering Restaurant Tickets simplifies the management of food expenses in your company and is a great help for the worker. By reducing the tax base of the worker’s salary, the amount of taxes to be paid is also reduced, so that each month the employee can receive more money without giving up anything.
Nursery checks represent a significant improvement in the compensation of employees with children who are still in the first cycle of early childhood education.
In this case, the amount paid can be fully deducted from the company’s Corporate Tax and there is no maximum amount.
Some benefits of offering this type of benefit in your company are:
- Improves work and family reconciliation for employees with children.
- Reduces work absenteeism.
- Improve productivity and work environment in the company.
Transportation can be one of the main expenses for an employee. An alternative for those companies that are far from the city or have schedules that do not coincide with those of public transport (such as those that work with rotating shifts), may be to enable buses or vans that take workers to their jobs.
It is also possible to offer transport tickets with which to increase the purchasing power of the worker without the need to incur extra costs or a salary increase.
An employee may benefit from a maximum amount of €136.36 per month (€1,500 per year) as long as it does not amount to more than 30% of their gross annual salary.
Incorporating this type of aid for transport means:
- Drastically reduce absenteeism in the office.
- Increases employee productivity.
- Motivate and raise awareness of the use of public transport.
Training and courses
Training plans and courses are a very good option to improve team productivity and retain talent.
There are initiatives such as Fundae.es, a public foundation, which allows companies to offer partially or totally subsidized training plans for their employees.
In this way, most of the courses have zero cost for the companies and they can continue training the professionals of their team.
Pension plans are a bet on the future of the worker.
They are part of a possible way of remuneration in kind in the payroll and improve the image of the company in the face of the human team. be deducted from the company’s Corporate Income Tax Base.