Fringe benefits

Fringe benefits are a non-monetary form of benefits that your company may provide to its employees. Theoretically, fringe benefits can be any goods, services or other benefits of value you give to an employee of your company. However, your company holds the right of ownership or possession of a fringe benefit.

Your company may independently define the fringe benefits it provides to its employees. Accommodation, car, meal and telephone benefits are among the most common fringe benefits. Other fringe benefits include, for example, employer-subsidised public transport tickets, clothing, boats, motorcycles, holiday trips and domestic help.

Fringe benefits are often regular or ongoing in nature. For example, an employer-subsidised accommodation is an ongoing fringe benefit. However, fringe benefits may also be non-recurring. For example, you may provide an employee a non-recurring permission to use a car owned by your company.

An employee’s total remuneration is usually comprised of salary and fringe benefits. You and your employee may agree on a total salary from which the market value of the fringe benefits is subtracted. The employee’s monetary salary is the remainder of the subtraction. In principle, you can pay an employee’s salary in full as fringe benefits, but in practice, this is uncommon.

Like monetary salary, the fringe benefits your company provides to your employees are taxable income. In general, you must deduct a prepayment of taxes and pay the employer’s health insurance contributions from the provided fringe benefits. Report fringe benefits with the Incomes Register’s earnings payment data report. You may subtract the costs of providing a fringe benefit from your company’s taxable income. More information on business taxation

The Tax Administration annually determines the value of the most common fringe benefits such as accommodation, car, meal and telephone benefits. The taxation of certain fringe benefits such as employer-subsidised public transport tickets is determined in accordance with the Income Tax Act. Other fringe benefits are taxed on the basis of their market value.

Your company may provide its employees fringe benefits for free, or it may collect fees for the benefits. If your company collects a fee for using a fringe benefit, collect the fee from the monetary salary, that is, the net salary of the employee using the benefit. If the fee is at least equal to the value of the fringe benefit, the employee is not taxed on the fringe benefit.