This is how employee benefits work

Benefits often have a big impact on how satisfied Swedish workers feel in their workplace. These can be in the form of, for example, wellness or flexible working hours and can be helpful in the struggle to recruit competent employees. For both employers and employees, there are some benefit rules to keep an eye on.

What is a perk?

Benefits are a form of compensation that any employer can choose to give to their employees. One of the most common benefits is health care contributions. It is an allowance that covers the costs of wellness, exercise and exercise.

Benefits to employees can be offered tax-free. However, the benefit must meet the following criteria for it to be tax-free:

1. The same benefit shall be offered to all employees.
2. The amount of compensation must remain within the limits set by the Tax Agency.
3. The benefit needs to be either employee care or have a connection to work.

Taxable benefits

In addition to the benefits that are tax-free, there are also some taxable benefits. What distinguishes tax-free benefits from taxable benefits is that the employer must pay employer contributions as well as make tax deductions for taxable benefits.

Examples of benefits that are taxable include free health care insurance and a car benefit where the employee is allowed to use the car privately.

Since there are some exceptions regarding benefits and tax liability, it is always a good idea to check the exact rules via the Benefits Employee Tax Agency.

Different types of benefits to employees

There are a wide variety of benefits that employers can provide to their employees. Common tax-free perks include, for example, Christmas gifts, coffee and fruit at the workplace, and staff parties.

Other tax-free benefits for employees may include:

• Wellness where employees receive wellness grants of up to SEK 5,000 to use for activities such as exercise and exercise.
• Employee benefits for the purpose of creating well-being at work. This could be about free access to coffee or charging points for electric vehicles.
• Insurance policies such as pension insurance, travel protection insurance and group life insurance.
• Pension benefits, such as occupational pension and pension savings.
• Transport benefit in the form of car and bicycle benefit.
• Development of competencies within the organization.
• Benefits linked to leave, such as extra vacation days.
• Company-specific benefits that are unique benefits to further strengthen engagement and corporate culture.

Benefit with gross salary deduction

A special type of benefit is employee car benefit and bicycle benefit with gross salary deduction. It is a benefit that is divided into two parts. Specifically, a benefit value and a gross wage deduction.

Gross wage deduction benefit car example:

An employer offers the employee a staff car as a benefit with a gross wage deduction. The benefit value is then added to the employee's gross salary before the tax is deducted. The employee pays taxes based on the salary along with the benefit value. The gross wage deduction causes the worker to receive a lower gross salary in exchange for the benefit.

This means that the employee car is financed with the gross salary instead of the net salary, which means that the employee does not have to pay for the car with already taxed money. Cycle benefit gross wage deduction works the same way.

Remember that gross wage deductions affect retirement by reducing the employee's pension.

Why benefits are important

Today, tax-free benefits are a big part of what makes an employer attractive. Benefits such as retirement savings and insurance can sometimes be a decisive factor in recruitment. In recent times, among other things, the possibility of teleworking and flexible working hours has become one of the most sought-after benefits for many workers.

Giving employees choices and opportunities to influence their lives is becoming increasingly important and is something that can be a good thing to keep in mind when designing company benefits.

Attractive benefits are a long-term investment for satisfied employees. Workers who thrive and do well in the workplace work better and will remain within the company to a greater extent. Employee care and benefits are therefore equally important, regardless of the size of the company.

Simplify your company's benefits management

Mint Business Cards can help your company create a more efficient management of employee benefits. The business card has integrated expense management that is directly linked with the accounting for easier management. With simplified accounting, convenient categorization of expenses, automated VAT calculation and several other features, Mynt Business Card can facilitate the management of all expenses of the business. Managing and accounting for expenses has never been easier.

Sources

Swedish Tax Agency - Salary and Compensation

Swedish Tax Agency - Work and Income

Verkkhet.se - What does it cost to hire?