Charging part of the salary in the form of meal vouchers, transport payments, medical insurance, or childcare services can reduce the IRPF bill. This is what is known as flexible remuneration: a system in which the worker replaces part of their salary in cash with certain goods or services provided by the company.
However, there is a common misunderstanding about this formula. The 30% limit established by the Workers’ Statute does not mean that this part of the salary is automatically exempt from taxes. This is a labor limit on the amount that can be received in kind. The tax advantages depend on each concept and on the conditions set out in the IRPF Law.
Therefore, not everything included in a flexible remuneration plan allows you to pay less tax. To benefit from exemptions, the product or service must fit within the cases provided for by the tax authority and respect its limits.
What does the 30% limit of salary in kind mean
Article 26 of the Workers’ Statute establishes that salary in kind cannot exceed 30% of the worker’s salary receipts. In addition, this form of remuneration cannot reduce the full amount in cash of the interprofessional minimum wage (SMI).
This means that a company cannot freely replace more than that percentage of the salary with products or services. The limit affects the composition of the remuneration, not its taxation.
For example, a person with an annual salary of 30,000 euros could receive a part of their remuneration in kind, as long as the legal limits and the conditions of the agreement with the company are respected. But that amount being within the permitted 30% does not imply that it is free from IRPF.
The Personal Income Tax Law establishes which in-kind remunerations are exempt and which must be taxed. It is also important that the plan is agreed between the company and the worker, through the collective bargaining agreement or the corresponding contract. If the company gives money to the employee so that they buy a product or service on their own, it is generally considered cash remuneration and does not benefit from the specific rules for in-kind remuneration.
What payroll concepts can be exempt from IRPF
The most common exemptions in flexible remuneration plans affect food, public transport, health insurance, and certain educational services for employees’ children. Each has its own conditions.
ConceptTax exemptionMain conditions
FoodUp to 11 euros per working dayFood vouchers, cards, or nominative, non-transferable electronic means, usable in catering establishments.
Public transportUp to 1,500 euros per yearIt must be used for commuting between the residence and the workplace by collective transport.
ChildcareNo specific monetary limit in the exemptionEducational service provided by authorized centers for employees’ children.
Health insuranceUp to 500 euros per year per insured personIt may cover the employee, their spouse, and descendants. The limit rises to 1,500 euros per person with a disability.
Food vouchers: up to 11 euros per day
Food vouchers or cards are exempt from IRPF up to a maximum of 11 euros per day. To apply this benefit, they must be used on working days for the employee and cannot coincide with days on which the employee receives exempt subsistence allowances for travel.
In addition, the means of payment must be nominative and non-transferable; they cannot be converted into cash or allow the unused balance from one day to be carried over to the next, and they can only be used in catering establishments. If the daily limit is exceeded, the excess is taxed as in-kind remuneration.
Public transport: up to 1,500 euros per year
The company may pay for the transport pass or collective transport tickets that the employee uses to travel from their home to the workplace. The exemption has a limit of 1,500 euros per year per worker.
Cards or electronic payment means intended exclusively to purchase collective public transport tickets are also accepted. In this case, the monthly amount cannot exceed 136.36 euros, without going beyond the annual limit.
The benefit does not extend to any mobility expense: gas, parking, tolls, or the use of a personal vehicle do not fall under this exemption. Nor is it sufficient that the company reimburses the cost of the pass in cash, since that payment is considered money income.
Childcare: exemption without a specific monetary limit
The regulations include an exemption for preschool, early childhood, primary, compulsory secondary education, baccalaureate, and vocational training services provided to the employees’ children by authorized educational centers.
In the case of nursery care, this allows the service to be financed through a flexible remuneration plan without a specific financial limit within this exemption. To do so, the provision of the educational service must be carried out by an authorized center, and not a delivery of money to the worker so that they pay the expense on their own.
Health insurance: up to 500 euros per person
The premiums that the company pays for a sickness insurance policy are exempt up to 500 euros annually for each covered person. The policy may include the worker themselves, their spouse, and their descendants.
If any of the insured persons has a disability, the limit increases up to 1,500 euros annually per person. The amounts that exceed those thresholds are considered income from work in kind and must be taxed.
What happens if the limit for each benefit is exceeded?
The tax exemption does not necessarily disappear if the permitted amount is exceeded. In concepts that have a quantitative limit, the portion that exceeds that maximum becomes taxable as income from work in kind.
For example, if a company pays a health insurance policy of 700 euros per year for a worker without a disability, the first 500 euros are exempt and the remaining 200 euros must be included as income in kind subject to IRPF.
The same applies to meal vouchers that exceed 11 euros per day or to amounts intended for public transport that exceed the annual maximum. On the other hand, if the essential requirements of an exemption are not met, the entire amount may be subject to taxation.
How flexible remuneration is applied on the payroll
To implement a flexible remuneration plan, the company and the worker must agree on which part of cash remuneration is replaced by the chosen products or services. The change must be set out in the collective bargaining agreement or in the corresponding contract or agreement.
Once implemented, the amount allocated to those benefits is deducted from the cash portion of the salary and is reflected on the payroll. The company must identify the concepts and apply the corresponding tax rules for each one.
The main advantage is that, when it comes to exempt services and their conditions are met, the worker can enjoy them without their value being included in the IRPF tax base. However, flexible compensation does not mean getting more salary or always guaranteeing savings: it depends on the concepts contracted, their tax limits, and the situation of each employee.
In short, the 30% sets how much salary can be received in kind, but not how much can be collected free of taxes. To find out the real savings, you have to review each benefit separately.