Handling Spanish benefits-in-kind Handling Spanish benefits-in-kind

Handling Spanish benefits-in-kind
30 Nov 2014

Benefits in kind involve meeting private needs of employees for free - or for less - than market prices. In general, benefits in kind are not common in Spain, although things are changing fast. This mainly affects ex-pats assigned to work in Spain. This new report by ASEC reveals the basic rules.

Accommodation

The valuation of this salary in kind (subject to taxation and social security contributions) will depend on whether:

• The employer is the owner of the apartment/house
• The employer rents out the apartment/ house to the employee

Transport

The valuation of this salary in kind (subject to taxation and social security contributions) will depend on whether:

• The car is bought by the employer to be delivered to the employee
• Only the employee uses the car
• The car is leased the employer or the employer contracts a renting car
• All the yearly expenses incurred such as insurance, repairs, road taxes etc will be considered as a benefit in kind if they are paid by the employer.

Loans

The valuation of this benefit in kind (subject to taxation and social security contributions) is calculated from the difference between the interest paid by the employee and the legal interest in force. There is no benefit in kind for any payroll advance of the current monthly salary if this is discounted when the salary is paid at the end of the mentioned month.

Salaries in kind with an advantageous tax effect Meal tickets

It will be a salary in kind (not subject to taxation but subject to social security contributions) if the following conditions are met:

• Meal tickets cannot be used on working days in which the employees receive perdiem meals allowances for outside work
• The maximum daily amount (not subject to taxation) is 9 Euros
• Meal tickets are not transferable. • The value of meal tickets not used cannot be added to other days
• Neither the company nor a third party can reimburse meal tickets
• Meal tickets can only be used in hotels and catering establishments
• The company that delivers the meal tickets must keep a record of them.

Transport

It will be considered as a salary in kind (not subject to taxation, but subject to social security contributions) with a limit of 1,500 Euros per year for each employee paid for public transport providers to get them between home and the work. It will also be a salary in kind (not subject to taxation but subject to social security contributions) when the indirect methods of payment made to public transport services (such as transport cards or other electronic means of payment) meet the following requirements:

• They are exclusively used for public transport
• The amount you can pay with cards or electronic means cannot exceed 136.36 Euros per month per employee, with a limit of 1,500 Euros per year
• They must be numbered, issued in registered forms and include details of the issuing company
• They will not be transferrable
• Neither the company nor a third party can reimburse the transport cards
• The company that delivers the transport cards or electronic means must keep a list of them stating the employees, the document numbers and the annual amounts available to employees.

Healthcare

It will be a salary in kind (not subject to taxation but subject to social security contributions) if the premiums paid by the employer to insurance companies to cover the illness of employees, their spouses and children do not exceed 500 Euros each per year.

Health insurance is offered by the employer to the employees on a voluntarily basis. Different employers can have a different benefits policy;therefore there are no particular standards.

It is important to differentiate healthcare from workers’ risk prevention plan and health monitoring, which is compulsory for employers. They must contract this service with one of the entities accredited by the Spanish authorities, which are mainly focused on the prevention of work accidents. Employees must meet the optimal conditions and carry out their functions within the scope of the employment.

Depending on the employers’ business activities, the entities employed may have their own conditions. For example, employees may need to be trained on prevention courses and may also need to undergo an annual medical checkup to evaluate whether they are physically able to carry out tasks. The cost varies on the number of employees, the type of business activities and proposals provided by the insurers.

Salaries in kind not subject to taxation

Education

It will be a salary in kind (not subject to taxation but subject to social security contributions) when nursery school services directly contracted by the employer with an authorised third party, or indirectly via ‘nursery tickets’ (fulfilling legal requirements) fall within the general remuneration policy of the company/employer.

Nursery tickets must be numbered and include the parents’ (employee’s) and child’s names. They are not transferable or refundable.

Employee training

It will be a salary in kind (not subject to taxation but subject to social security contributions) when the total cost incurred by the employer on employee training is for the development of the employee’s business activities or is directly related to the employee’s job position.

Provision of a computer It will be a salary in kind (not subject to taxation but subject to social security contributions) when the total cost incurred by the employer on a computer for the employee’s use is spent on the necessary computer equipment and internet access.

By ASEC.

Benefits in kind involve meeting private needs of employees for free - or for less - than market prices. In general, benefits in kind are not common in Spain, although things are changing fast. This mainly affects ex-pats assigned to work in Spain. This new report by ASEC reveals the basic rules.

Accommodation

The valuation of this salary in kind (subject to taxation and social security contributions) will depend on whether:

• The employer is the owner of the apartment/house
• The employer rents out the apartment/ house to the employee

Transport

The valuation of this salary in kind (subject to taxation and social security contributions) will depend on whether:

• The car is bought by the employer to be delivered to the employee
• Only the employee uses the car
• The car is leased the employer or the employer contracts a renting car
• All the yearly expenses incurred such as insurance, repairs, road taxes etc will be considered as a benefit in kind if they are paid by the employer.

Loans

The valuation of this benefit in kind (subject to taxation and social security contributions) is calculated from the difference between the interest paid by the employee and the legal interest in force. There is no benefit in kind for any payroll advance of the current monthly salary if this is discounted when the salary is paid at the end of the mentioned month.

Salaries in kind with an advantageous tax effect Meal tickets

It will be a salary in kind (not subject to taxation but subject to social security contributions) if the following conditions are met:

• Meal tickets cannot be used on working days in which the employees receive perdiem meals allowances for outside work
• The maximum daily amount (not subject to taxation) is 9 Euros
• Meal tickets are not transferable. • The value of meal tickets not used cannot be added to other days
• Neither the company nor a third party can reimburse meal tickets
• Meal tickets can only be used in hotels and catering establishments
• The company that delivers the meal tickets must keep a record of them.

Transport

It will be considered as a salary in kind (not subject to taxation, but subject to social security contributions) with a limit of 1,500 Euros per year for each employee paid for public transport providers to get them between home and the work. It will also be a salary in kind (not subject to taxation but subject to social security contributions) when the indirect methods of payment made to public transport services (such as transport cards or other electronic means of payment) meet the following requirements:

• They are exclusively used for public transport
• The amount you can pay with cards or electronic means cannot exceed 136.36 Euros per month per employee, with a limit of 1,500 Euros per year
• They must be numbered, issued in registered forms and include details of the issuing company
• They will not be transferrable
• Neither the company nor a third party can reimburse the transport cards
• The company that delivers the transport cards or electronic means must keep a list of them stating the employees, the document numbers and the annual amounts available to employees.

Healthcare

It will be a salary in kind (not subject to taxation but subject to social security contributions) if the premiums paid by the employer to insurance companies to cover the illness of employees, their spouses and children do not exceed 500 Euros each per year.

Health insurance is offered by the employer to the employees on a voluntarily basis. Different employers can have a different benefits policy;therefore there are no particular standards.

It is important to differentiate healthcare from workers’ risk prevention plan and health monitoring, which is compulsory for employers. They must contract this service with one of the entities accredited by the Spanish authorities, which are mainly focused on the prevention of work accidents. Employees must meet the optimal conditions and carry out their functions within the scope of the employment.

Depending on the employers’ business activities, the entities employed may have their own conditions. For example, employees may need to be trained on prevention courses and may also need to undergo an annual medical checkup to evaluate whether they are physically able to carry out tasks. The cost varies on the number of employees, the type of business activities and proposals provided by the insurers.

Salaries in kind not subject to taxation

Education

It will be a salary in kind (not subject to taxation but subject to social security contributions) when nursery school services directly contracted by the employer with an authorised third party, or indirectly via ‘nursery tickets’ (fulfilling legal requirements) fall within the general remuneration policy of the company/employer.

Nursery tickets must be numbered and include the parents’ (employee’s) and child’s names. They are not transferable or refundable.

Employee training

It will be a salary in kind (not subject to taxation but subject to social security contributions) when the total cost incurred by the employer on employee training is for the development of the employee’s business activities or is directly related to the employee’s job position.

Provision of a computer It will be a salary in kind (not subject to taxation but subject to social security contributions) when the total cost incurred by the employer on a computer for the employee’s use is spent on the necessary computer equipment and internet access.

By ASEC.