Your company may improve the motivation and work ability of its employees with employee benefits such as exercise vouchers. Employee benefits may be either tax-free or taxable income.
Your company may provide its current or retired employees with employee benefits. The benefits are based on an employment relationship or a public-service employment relationship, but they do not count as remuneration for performed work.
In general, employee benefits must be available to all of your company’s employees. For example, employees in a very short-term employment relationship are an exception to this rule. An employee may individually decide whether or not they wish to use a benefit.
Employee benefits include, for example, health care, recreation and leisure activity benefits your company organises for its employees. In addition, personnel discounts, exercise vouchers and special day gifts and other gifts of small value are considered employee benefits. If your company is a transport company, free or discounted travel tickets are also considered employee benefits.
By providing employee benefits, your company can create a positive image as an employer. Furthermore, they often facilitate work performance by maintaining your employees’ motivation and work ability.
If the employee benefits are available to all of your employees, they are of an ordinary nature and moderate in cost, they are usually free of tax for your employees. The ordinariness and moderateness of a benefit is assessed case by case depending on the nature of the benefit.
If an employee benefit is not available to all of your company’s employees, it is, in general, taxable income for the beneficiary. In that case, your company must withhold tax from the provided employee benefit and pay the employer’s health insurance premium.
In addition, employee benefits that are not considered ordinary and moderate are either fully or partly taxable income for the beneficiary. Your company must withhold tax from benefits received by its employees. However, your company does not have to pay health insurance contributions.
You may subtract the costs of providing an employee benefit from your company’s taxable income.