Fringe benefits are a form of non-cash compensation, offered in the form of goods or services, that is added to the salary of private sector employees. In 2025, important changes are expected regarding the tax exemption limits and the methods of using these benefits. In this guide, let’s see what they are, how they work, who they belong to, and what changes with the new provisions
.
Table of Contents:
What are fringe benefits
Fringe benefits, also known as ‘compensation in kind’ or ‘business benefits’, are non-monetary compensation that employers offer to employees in addition to the basic wage. Established by the 2016 Stability Law, these benefits are provided in the form of reimbursements, goods in kind or
ancillary services.
Their purpose is to improve the worker’s quality of life, providing services that can facilitate daily life. These benefits are not taxable within a certain threshold, which has historically been set at 258.23 euros per year. However, in recent years this threshold has been changed several times, increasing significantly for certain categories of workers.
Limits and thresholds in 2024
For the year 2024, the tax exemption limit has been increased to:
- 2,000 euros per year for employees with dependent children.
- 1,000 euros per year for workers without children.
These limits relate to the sum of all fringe benefits granted by the employer. If the threshold is exceeded, the full amount of benefits becomes taxable
.
What’s new for fringe benefits in 2025
In 2025, the Meloni government intends to reform the fringe benefits system, proposing to raise the tax exemption threshold to 2,000 euros for all employees, regardless of the number of children. In addition, it will be possible to use fringe benefits to cover expenses related to the rent or mortgage of the first home, thus expanding their use to essential items of expenditure for families
.
With the next Budget Law, a simplification of the system is therefore expected, with the creation of more uniform criteria for accessing and using these benefits. More official details on these changes are awaited
.
Who can take advantage of fringe benefits
Fringe benefits are intended for employees in the private sector. This includes those who have a fixed-term, indefinite or apprenticeship contract, and who hold various positions, such as workers, employees, managers and managers
.
Earners of income from assimilated work are also included, such as CO.CO.CO employees, directors and occasional self-employed workers. However, public sector (state) workers are excluded from the right to fringe benefits
.
It should be emphasized that the provision of fringe benefits is not mandatory, but depends on the employer’s company policy. In some cases, they may be negotiated through collective agreements with unions
.
Taxability limits
According to Article 51 of the Consolidated Income Tax Act (TUIR), fringe benefits are not taxable up to a threshold of 258.23 euros per year. If the total value of benefits exceeds this threshold, the entire amount becomes taxable and subject to a contribution
.
In 2024, the limits were increased to 2,000 euros for workers with children and 1,000 euros for those without children, and these thresholds will change further in 2025.
How fringe benefits work
Fringe benefits are part of non-cash compensation and are granted as goods or services. They can be recognized to entire categories of employees or only to certain workers for specific tasks
.
These benefits are part of corporate welfare policies, with the aim of improving the work environment, increasing productivity and encouraging employee loyalty. However, they are not mandatory and the employer decides whether to grant them
or not.
What are fringe benefits
Fringe benefits can include a wide range of goods and services. Among the most common are:
- Company cars for mixed use.
- Food stamps.
- Mobile phone, tablet, business PC.
- Homes for rent or on loan.
- Health or life insurance policies.
- Concessional loans.
- Scholarships.
These benefits can also be granted through vouchers or shopping vouchers, which employees can use to purchase goods or services.
What is not included in fringe benefits
Fringe benefits do not include certain benefits that are specifically provided for by Article 51 of the TUIR. These include ‘flexible benefits’, which include:
- Reimbursement of school fees.
- Refund for textbooks.
- Recreational trips or vacations.
- Preventive and diagnostic medicine.
How is the fringe benefit calculated in payroll
The value of fringe benefits is calculated taking into account the unit cost of the service or good offered to the employee, divided by 12 months. The monthly amount is then entered in the employee’s paycheck
.
If the total value of the benefits exceeds the tax-free thresholds (1,000 or 2,000 euros in 2024), the entire amount becomes taxable and subject to a contribution. Exceeding the threshold means that the benefit also affects the severance pay (severance
pay).
How to apply for fringe benefits
To obtain fringe benefits, the employee must request them from their employer. For the 2,000 euro bonus for employees with children, it is necessary to provide the tax code of the dependent children. The employer will communicate the data to the INPS through special electronic channels
.
Contributions for fringe benefits
Fringe benefits are subject to a social security contribution if they exceed tax-free thresholds. In this case, the employer must pay contributions on the entire amount of benefits provided.
Conclusions
Fringe benefits are an important tool for improving worker well-being and boosting productivity. The changes planned for 2025 aim to make these benefits more accessible and useful for a larger number of employees. With the raising of the tax exemption threshold and the expansion of the methods of use, fringe benefits will become an even more interesting tool
for corporate welfare.
