What tax benefits do benefits in kind offer to employees?
December 15, 2023 | 30,00 EUR | answered by Christiane Rapp
Dear tax advisor,
My name is Christian Waldmüller and I work as an employee in a medium-sized company. Lately, I have heard from various colleagues that in-kind benefits can offer tax advantages for employees. Since I have no experience with such benefits, I would like to learn more about them.
Currently, I receive my salary only in the form of cash payments. However, I have heard that employers can also offer their employees in-kind benefits such as fuel vouchers, meal vouchers, or job tickets. I am interested in whether it is worth accepting such in-kind benefits and what the tax implications on my income could be.
My concerns are particularly about not knowing whether accepting in-kind benefits would increase my taxable income and potentially result in higher taxes. On the other hand, I have also heard that in-kind benefits can be tax-favored, leaving me with more net income.
Therefore, my specific question to you as an expert is: What tax advantages do in-kind benefits offer for employees and how do such benefits affect my taxable income? Are there specific limits or tax-free allowances that I should consider? What documents or evidence do I need to correctly report in-kind benefits in my tax return?
Thank you in advance for your support and clarification on this matter.
Sincerely,
Christian Waldmüller
Dear Mr. Waldmüller,
Thank you for your question regarding the tax benefits of in-kind benefits for employees. It is good that you are interested in this topic, as in-kind benefits can indeed offer tax advantages.
In general, in-kind benefits are tax-favored because they are not provided in the form of cash payments, but rather in the form of in-kind benefits that represent a monetary value for the employee. The most common types of in-kind benefits include fuel vouchers, meal vouchers, job tickets, as well as gifts or the provision of company cars.
A major advantage of in-kind benefits is that they are often tax and social security free in many cases. This means that they are not added to the employee's taxable income and therefore do not increase the tax burden. This leaves more net income from the gross income, which is of course very attractive for employees.
However, there are also some limits and allowances that you should be aware of. For example, there are specific thresholds for certain in-kind benefits such as job tickets or meal vouchers, up to which these benefits are tax-free. If these thresholds are exceeded, the in-kind benefits must be taxed.
To correctly report in-kind benefits in your tax return, you usually need a certificate from your employer stating the in-kind benefits you have received and their value. You should submit this certificate with your tax return to ensure that your information is correct and that you can benefit from the tax advantages of in-kind benefits.
Overall, in-kind benefits can indeed offer tax advantages for employees, as long as you adhere to the applicable limits and allowances and report the in-kind benefits correctly in your tax return. If you have any further questions on this topic, I am happy to assist.
Best regards,
Christiane Rapp
