Flexible Remuneration Is Regulated By Spanish Law. Specifically,
There Are Two Laws That Contemplate It:
1. Law 35/2006 , Of November 28, On Personal Income Tax And Partial Modification Of The Laws On Corporation Tax, Non-resident Income Tax And Wealth Tax and
2. Royal Decree 439/2007 , Of March 30, Which Approves The Regulations On Personal Income Tax And Modifies The Regulations On Pension Plans And Funds, Approved By Royal Decree 304/2004, Of February 20th.
As You May Have Seen, The Flexible Remuneration System Has Very Favorable Tax Treatment For Both Employees And Companies. For This Type Of Remuneration To Work Correctly, The Company Must Withhold The Corresponding Personal Income Tax And Compute These Figures As Part Of The Employee’s Salary: Contributing To Social Security And Applying Personal Income Tax https://www.taxfortress.com/ With holdings Whenever Applicable.
When It Is Necessary To Calculate The Contribution Base Or Regulatory Base To Receive Some Type Of Benefit, Be It From Social Security Or An Unemployment Benefit, It Will Be Calculated Taking Into Account The Full Salary And The Amounts Received In Kind. It Will Also Be Taken Into Account For The Calculation Of Severance Pay. The Worker, For His Part, Must Declare This Remuneration In His Income Statement.
Limitations For Flexible Remuneration
According To The Regulations, There Are The Following Limitations For The Payment Of This Type Of Remuneration:
The Payment Of Wages In Kind Will Always Have To Be An Agreement Between The Employer And The Worker, Since The Worker Can Freely Choose Whether To Benefit Or Not. The Company Can Never Impose This Remuneration System On You Unless It Is Established By Regulation Or Is Set Out In The Labor Agreement.
The Salary In Kind May Not Exceed 30% Of The Worker’s Total Salary, And May Not Reduce The Amount Of Money To Be Received Equivalent To The Minimum Inter Professional Salary (smi).
When There Is An Agreement To Pay Salary In Kind, The Worker’s Salary Will Become A Flexible Remuneration , That Is, It Will Consist Of Two Parts, One Part Will Be The One That Will Receive In Money And The Other Part Will Be The One That Will Receive In Kind.
Regarding The Tax Treatment
Regarding The Tax Treatment Of Flexible Remuneration, The Worker Can Be Excluded From Personal Income Tax Up To 30% Of Salary . But You Have To Be Very Clear About What Is Considered Salary In Kind And What Is Not, Since Depending On This You Will Have To Make Withholdings On Account Or Not.
There Is Great Confusion About The Taxation Of Wages In Kind, Because Only Some Concepts Are Considered Income From Work And Will Be Subject To Personal Income Tax Withholding. These Expenses Will Compute For The Calculation Of The Regulatory Base To Receive Some Type Of Benefit, Both From Social Security And Unemployment, And Will Also Be Taken Into Account When Calculating Severance Pay.
In Which Cases Is The Flexible Remuneration Quoted?
Below We Will List In Detail Those Goods And Services That Do Imply A Contribution In Terms Of Flexible Remuneration.
Housing: The Company Can Provide Housing To The Worker For Free Or For A Price Lower Than The Market Price As Long As There Is An Employment Relationship Between Them.
Housing
Maintenance: Refers To The Delivery By The Company To The Worker Of Restaurant Checks. But It Can Also Allow You To Have Meals In The Company Canteen Assuming The Cost Of These.
Vehicle: Salary In Kind Will Only Be Considered When The Company Supplies It For Private Use And Not For Work Use.
Transportation: Refers To Payments For Transportation Made By The Worker To Go To The Workplace Or When He Returns Home From Work
Flexible Compensation Calculator
You Already Know That Flexible Remuneration Offers Significant Tax Savings And Also Allows You To Cover Basic Costs Such As Child Care, Transportation, Or Maintenance.
If You Want To Find Out What You Are Really Saving With Your Salary, Consult Our Flexible Remuneration Calculator By Clicking On The Following Link: Flexible Remuneration Calculator If What You Want Is To Know The Difference Between Your Gross Salary And Net Salary, You Can Use Our Net Income.
How To Offer Flexible Compensation For Employees
Offering This Type Of Compensation In Your Company Is Really Simple. At Factorial We Offer You The Best Types Of Flexible Remuneration And Benefits So That You Can Increase Your Employees’ Compensation Without Having To Increase Their Salaries.
Remember That The Premiums Paid By The Company For Medical Insurance Can Be Deducted From Corporation Tax Up To A Total Of 500 Euros Per Year Per Insured Employee.
In Addition, The Worker Who Receives This Medical Insurance As Part Of His Flexible Salary Will Not Have To Pay Personal Income Tax (IRPF) Up To A Total Of €500 Per Year, Since For Tax Purposes It Is Not Considered Income.
Flexible Compensation
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