Short answer: remuneration in kind is cost-effective when it falls within the personal income tax exemptions: health insurance up to 500 euros per person per year, a meal voucher scheme up to 11 euros per working day, public transport up to 1,500 euros per year, nursery fees and job-related training. Company cars, accommodation or personal expenses paid for by the company are taxed as salary. And almost everything, whether exempt or not, is subject to social security contributions.
What is remuneration in kind?
It refers to any benefit, service or entitlement that a company provides to an employee for their personal use, either free of charge or at a below-market price. A laptop used solely for work does not count; health insurance for the employee and their family does.
For tax purposes, it is considered income from employment: it is subject to personal income tax unless the law declares it exempt. For employment purposes, the Workers’ Statute stipulates that remuneration in kind may not exceed 30 per cent of the worker’s total remuneration.
What is, in fact, tax-efficient
| Concept | Exempt from personal income tax | Key conditions |
|---|---|---|
| Health insurance | Up to €500 per person per year (€1,500 for people with disabilities) | Covers the employee, their spouse and children. The excess is subject to tax. |
| Meal voucher or ticket | Up to €11 per working day | Valid only on days worked; cannot be accumulated or transferred. |
| Public transport | Up to €1,500 per year | For the journey between home and work. |
| Nursery (0 to 3 years) | No limit on the amount | A centre authorised, contracted or paid for by the company. |
| Training | No limit on the amount | Work-related |
| Company shares | Up to €12,000 per year | Available to all staff; shares must be held for three years, and the family’s total holding must not exceed 5 per cent of the share capital. |
Why it’s worth it: an employee with a marginal tax rate of 30 per cent who receives 200 euros a month on a meal voucher, rather than an additional 200 euros in gross salary, saves around 60 euros a month in income tax – around 720 euros a year. It costs the company the same.
What isn’t very efficient (or not at all)
Company car for private use
Taxation. If the car is owned by the company, the annual benefit in kind is 20 per cent of its purchase price; if it is leased, it is 20 per cent of its market value as new, in proportion to private use. The valuation may be reduced by up to 30 per cent for efficient vehicles (electric, plug-in hybrids) that meet the requirements of the Personal Income Tax Regulations. Please note: fuel paid for by the company constitutes a separate benefit in kind.
Housing
Tax is payable at 10 per cent of the assessed value (5 per cent if it has been revised), subject to a cap of 10 per cent of other income from employment. This is common in expatriate packages, and it is advisable to calculate it before signing.
Personal expenses paid by the company
Gym membership, school fees for children from primary school onwards, household expenses or holiday costs: these are taxed in full, just as if they were part of your salary. There is no tax advantage, just convenience.
Exceeding the limits
Any amount exceeding the tax-free allowance is subject to tax. An insurance policy worth 800 euros for an employee is subject to tax on 300 euros.
Requirements not properly met
A restaurant card that allows a balance to be built up, or insurance paid for directly by the employee and then reimbursed by the company, loses its tax exemption. The design matters just as much as the concept.
Two common pitfalls: National Insurance and advance payments
National Insurance. Just because something is exempt from income tax does not mean it is not subject to social security contributions. Since 2014, most benefits in kind (health insurance, meal vouchers, transport, nursery fees) have formed part of the contribution base. The saving is in tax, not in labour costs.
Payment on account. For the portion that is not exempt, the company must make advance payments towards the employee’s income tax, just as it does with tax deductions. If the company makes these advance payments itself rather than passing them on to the employee, that amount also counts as remuneration for the employee. Many payroll errors stem from this.
For the company: what are the benefits?
- It is a personnel cost that is deductible for corporation tax purposes.
- It increases the employee’s take-home pay without increasing the wage bill.
- It helps to attract and retain talent, particularly international candidates who compare remuneration packages across different countries.
For this to work, it must be agreed in the contract or in a flexible remuneration agreement and correctly reflected on the payslip.
International employees and the Beckham scheme
Expatriate packages usually include accommodation, international schooling and travel, all of which are generally subject to tax. Furthermore, if the employee is covered by the special regime for posted workers (the Beckham Law), their taxation is governed by specific rules. Before designing the package, it is advisable to analyse each component in light of the employee’s tax regime.
Frequently Asked Questions
Is exempt remuneration in kind subject to Social Security contributions?
In most cases, yes. The exemption applies to income tax, not to social security contributions.
What is the maximum amount that can be paid in kind?
Payment in kind must not exceed 30 per cent of the employee’s total remuneration.
Is a company car subject to tax if I only use it to get to work?
Yes. The journey between home and work is considered private use. If, in addition, the car is available outside working hours, the tax authorities may take this into account.
Design a remuneration package that works
At GR International Advisors, we review your company’s remuneration policy, calculate the actual impact on income tax and social security contributions, and tailor packages to suit both local and international employees. Contact our team, and we’ll review your situation.
This is for guidance only and is current as of October 2026. Each case must be assessed on an individual basis, and the regulations may change.