EU Standard Employee Benefits

Published in the Official Journal of the European Union L072 of 14 March 2019, Regulation (EU) 2019/402 of 13 March 2019 amending Regulation (EC) n. 1126/2008 which adopts certain international accounting standards in accordance with regulation (EC) no. 1606/2002 of the European Parliament and of the Council with regard to the International Accounting Standard IAS 19 Employee Benefits.

Companies will have to apply these changes at the latest starting from the date of commencement of their first financial year starting on 1 January 2019 or later . Early application is permitted, in this case this fact must be indicated.

The objective of the amendments is to clarify that, after the modification, reduction or termination of the defined benefit plan, the company should apply the updated hypotheses from the redetermination of its net liability (asset) for defined benefits for the remainder of the period of reference.

We remind you that the purpose of this Standard is to define the accounting methods and additional information relating to employee benefits . This Standard requires the entity to recognize:

a liability when an employee has worked in exchange for benefits to be paid in the future e
a cost when the entity uses the economic benefits deriving from the work performed by an employee in exchange for benefits.
Employee benefits include:

short-term benefits for employees , such as those shown below, if they are expected to be paid in full within twelve months of the end of the year in which the employees provide the related services:
i ) wages, salaries and social security contributions;
ii ) compensation in lieu of vacation and sick leave;
iii ) profit sharing and incentive plans; and
iv ) non-monetary benefits (such as medical assistance, housing, company car and free or reduced-price goods or services) for current employees;
post-employment benefits , such as:
i ) pension benefits (for example, pensions and one-time payments at retirement); and
ii ) other post-employment benefits, such as life insurance and medical assistance;
other long-term employee benefits, such as:
i ) paid long-term absences such as permits linked to length of service or availability of sabbaticals;
ii ) anniversaries or other benefits related to length of service; and
iii ) benefits for permanent disability; is
benefits due to employees for termination of the employment relationship

From optimizing the tax advantage to improving the well-being of its employees: all the possible advantages associated with corporate welfare, by company … and workers!
The advantages – for company and employees – deriving from the introduction of a welfare plan can be substantially grouped into 3 macro-categories:

1. Optimization of the tax advantage for the company, in accordance with current legislation and, in particular, by art. 51 and 100 of the Consolidated Income Tax Law

2. Increase in purchasing power for the employee : unpaid and paid benefits but also discounts, promotions, agreements, goods and services with exclusive conditions

3. Increase in corporate well-being : improvement of the corporate climate, decrease in turnover and absenteeism, greater attraction and retention for the company.

The point of view of the worker: optimization of the tax advantage and corporate well-being
W ith welfare plans , the company can offer workers a panel of non-monetary services and benefits whose value – with the same costs sustained – is actually higher than that generated by the direct disbursement of the corresponding figure in payroll by virtue of greater fiscal convenience.

Evaluations of the convenience of corporate welfare

The difference is far from negligible and therefore translates for the employee first of all into an increase in the purchasing power of his salary. By way of example, it will be sufficient to consider the case of a worker who receives a gross annual salary of € 28,000 and receives a performance bonus of € 3,000 per year. The possibilities in this regard are in fact three: 1) a direct increase in payroll, with a consequent increase in the RAL; 2) the payment of the performance bonus in payroll; 3) conversion of the performance bonus into corporate welfare services.

As shown in the table, which for simplicity of calculation does not take into account any deductions for family loads and income-generating expenses or tax benefits per employee, the first case appears to be the most burdensome in tax terms, as the RAL it will be entirely subject to the IRPEF tax rates , so the 3 thousand euro increase will be taxed at 38% (third tier). In the second case, the premium paid in the pay slip will be subject to a substitute tax of 10% (however, cheaper than the 38% envisaged in the first case); finally, in the third case, that is, converting the performance bonus into welfarecompany, the tax advantage is reflected both in the complete tax deductibility of the bonus itself and in the complete exemption of the deduction of INPS contributions. In practice, therefore, a real reduction of the tax and contribution wedge. If in addition to the tax advantage deriving from the tax reduction of the performance bonus, also the contributions destined to supplementary pension and supplementary health care, completely deductible within the limits set by the legislation , are added, the savings in terms of taxes due would then be even more marked.

Summing up, corporate welfare can therefore offer employees a double opportunity: to benefit from useful services for themselves and their employees on family members and to have additional savings to be used for their own consumption, favoring greater “loyalty” towards them along this path. company.

Leave a Reply