Accountant and employee benefits

EMPLOYEE BENEFITS: WHAT ARE THEY?

Employee benefits represent all initiatives that the employer takes in order to increase his/her employees – and their family’s welfare (as the English word itself suggests) by granting benefits that are considered to be significantly important under a social point of view. Some common examples of employee benefits refer to:

  • employee- and his/her family’s health;
  • education of the employee’s children;
  • assistance dedicated to old members of the employee’s family or dependent people;
  • home loan;
  • purchase of season tickets for local and regional public transport;
  • employee- and his/her family’s free time.

When a business elaborates plans dedicated to employee benefits, the identification of employees’ primary needs plays a key role, as well as the creation of a benefit system that completely reaches corporate performance goals in terms of self-realization of all employees, resulting in a general improvement of their private and professional life.

The possibility to reduce labour costs both for employees, by means of a total tax cut of employee benefits, and for employers, by means of lowered social security contributions, can stimulate the development of employee benefits plans.

All welfare plans should be offered by businesses to all people or to some categories of employees in order to be deducted or untaxed.

ITALIAN WELFARE SYSTEM SINCE 2016

Italian financial act 2016 started the promotion of Italian welfare system on two fronts:

  • amended article 51 of the TUIR (Income Tax Code): the amount of untaxed employee benefits was increased and, at the same time, businesses can benefit from a higher tax deduction under certain conditions. Some of the untaxed benefits refer to babysitting service, day camps and eventual expenses to assist old family members;
  • performance bonus: the employee can turn his/her performance bonus into totally untaxed benefits or, alternatively, exploiting a special taxation system based on a 10% substitute tax.

NEW WELFARE MEASURES SINCE 2017

Italian financial act 2017 made performance bonuses more usable, as it increased the limit of compensation of employees in order to let them benefit from tax concessions (from € 50,000 to € 80,000), as well as the maximum limit to apply the substitute tax (from € 2,000 to € 3,000, and, for business that involve their employees in the organization of corporate activities, from €  2,500 to € 4,000). Moreover, other benefits that employees can use instead of their performance bonuses include cars for business and private use, lodgings for employees and loans.

SEASON TICKETS FOR PUBLIC TRANSPORT ARE INCLUDED IN ITALIAN FINANCIAL ACT 2018

Italian financial act 2018 included season tickets for local, regional and inter-regional public transport for employees and for those family members that are at their expense in employee benefits. Documents that each employee will have to give to his/her employer are the season tickets, as, according to Decree dated June 30th 1992, they are considered to be receipts and, as a result, they can prove the expense to buy them. However, if it deals with a not personal season ticket, the employee will also have to produce a self-drafted affidavit attesting that the season ticket was bought for the employee himself/herself or for one of his/her family members that are at his/her expense.

EMPLOYEE BENEFITS PLANS: WHAT SHOULD YOU DO?

The Chartered Accounting Firm CARAVATI PAGANI supports businesses both during the preliminary assessment of any welfare plan and during their establishment. The bureaucratic procedure that you normally have to follow consists in:

  • an assessment of preferences expressed by employees about benefits to be introduced by means of corporate welfare plans;
  • the identification of measures that can be implemented among all expressed preferences;
  • an analysis concerning the organization of these measures;

a quantification of the budget that is necessary to implement the taken measures.