How employee benefits work

Benefits often have a significant impact on the satisfaction of Swedish employees in their workplace. These can be in the form of health care or flexible working hours, for example, and can help in the fight to recruit competent employees. For both employers and employees, there are a number of benefit rules to be aware of.

What is a benefit?

Benefits are a form of compensation that all employers can choose to provide to their employees. One of the most common benefits is a wellness allowance. It is an allowance that covers the costs of health care, training and exercise.

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

1. The same benefit should be offered to all employees.
2. The amount of the allowance must remain within the limits set by the tax authorities.
3. The benefit needs to be either staff-friendly or work-related.

Taxable benefits

In addition to the benefits that are tax-free, there are also some taxable benefits. The difference between tax-free benefits and taxable benefits is that the employer must pay employer contributions and make tax deductions for taxable benefits.

Examples of taxable benefits are free medical insurance and a car benefit where the employee can use the car privately.

As there are some exceptions regarding benefits and tax liability, it's always a good idea to check the exact rules with the Swedish Tax Agency.

Different types of employee benefits

There is a wide range of benefits that employers can provide to their employees. Common tax-free benefits include Christmas gifts, coffee and fruit in the workplace and staff parties.

Other tax-free benefits for employees may include:

• Wellness where employees receive a wellness allowance of up to SEK 5 000 to use for activities such as training and exercise.
• Staff benefits designed to promote job satisfaction. For example, free access to coffee or charging points for electric vehicles.
• Insurance such as pension insurance, travel insurance and group life insurance.
• Pension benefits, such as occupational pensions and pension savings.
• Transportation benefit in the form of car and bicycle benefit.
• Skills development within the organization.
• Benefits linked to leave, such as extra vacation days.
• Company-specific benefits that are unique benefits designed to further strengthen engagement and company culture.

Benefit with gross salary deduction

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

Gross salary deduction car benefit example:

An employer offers a company car to an employee as a benefit with a gross salary deduction. The benefit value is then added to the employee's gross salary before tax is deducted. The employee pays tax based on the salary together with the benefit value. The gross salary deduction means that the employee receives a lower gross salary in exchange for the benefit.

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

Remember that gross salary deductions affect pensions 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 pension savings and insurance can sometimes be a decisive factor in recruitment. More recently, telecommuting and flexible working hours have become one of the most sought-after benefits for many employees.

Giving an employee choice and the ability to influence their lives is becoming increasingly important and is something that can be considered when designing company benefits.

Attractive benefits are a long-term investment in employee satisfaction. Employees who are happy and healthy in the workplace work better and are more likely to stay with the company. Employee care and benefits are therefore equally important, regardless of the size of the company.

Simplify your company's management of benefits

Mynts company card can help your company create a more efficient management of employee benefits. The company card has integrated expense management that is directly linked to accounting for easier management. With simplified bookkeeping, easy categorization of expenses, automated VAT calculation and many other features, the Mynt business card can help you manage all your business expenses. Managing and recording expenses has never been easier.

Sources

Swedish Tax Agency - Salary and remuneration

Swedish Tax Agency - Work and income

Verksamhet.se - What does it cost to hire?