Flexible remuneration is a benefit, given through payment in kind in Spain, that is different to a monetary benefit and that has been agreed to between the worker and the company. This type of remuneration can be advantageous for both parties. This payment in kind cannot exceed 30% of the worker’s gross salary.
It allows the employer to give employees the chance to decide what part of their pay goes towards certain in-kind products or services, which have particular fiscal advantages, such as tax exemptions.
Types of payment in kind
The most common types of payment in kind included in the salary of workers, and their corresponding fiscal benefits, are:
- Private medical insurance. If the company pays the health insurance premiums of workers, their partner and/or children, it could entail a tax advantage of 500 euros per year, exempt from the annual personal income tax, for the worker on each insurance policy taken out.
- Meal vouchers and restaurant tickets. Up to 11 euros per day are tax-free for the worker.
- Transport passes. Up to 1,500 euros per year are tax-free for the worker.
- Use of assets for social and cultural services of workers. One of the most significant benefits is the monthly payment of childcare fees. This is completely tax-free for the worker.
With the implementation of this system, companies have the possibility of increasing their workforce’s net income without increasing costs per worker, which also leads to an increasing sense of worker-loyalty towards the company.
Workers, with these tax incentives, increase their purchasing power and have the option of distributing their salary according to their needs and interests.
In summary, if the company wants to improve the conditions of workers, as well as improve their net remuneration without excessively increasing company costs, it must first conduct a study on the matter and decide on the type of payment that is suitable for its workforce. Finally, it has to implement the most appropriate type of payment in kind in Spain that its workers mutually agree to.