Fringe benefits represent a form of non-cash compensation that companies offer to their employees, in the form of goods or services, as an addition to their salary. These benefits are not subject to taxation within specific thresholds and offer numerous benefits to private sector workers. With the approval of the Budget Law, there are important changes for the years 2024 and 2025, concerning the limits and methods of providing these benefits
.
In this guide, we explain what fringe benefits are, how they work, who is entitled to them and what are the main changes for 2025.
Table of Contents:
What Are Fringe Benefits?
Fringe benefits, also called ‘compensation in kind’ or ‘business benefits’, are a form of non-monetary compensation that employers provide to their employees. These may include material goods or services that are additional to the normal salary
.
Introduced with the 2016 Stability Law, fringe benefits are provided through reimbursements, goods in kind or additional services, with the aim of improving the worker’s quality of life and well-being. Among the most common fringe benefits are company cars, food stamps, insurance policies and
electronic devices.
An important feature of fringe benefits is that, within certain limits, they are not subject to taxation or social security contributions.
Fringe Benefit 2025 news
For 2025, there are important changes confirmed by the Council of Ministers. As in 2024, the tax exemption thresholds for fringe benefits are
set at:
- 2,000 euros per year for workers with dependent children.
- 1,000 euros per year for workers without children.
In addition, to encourage mobility and employment, from 2025, increases will be introduced for new hires who agree to move more than 100 kilometers from their residence.
Who Is Eligible for Fringe Benefits?
Fringe benefits can be granted to all employees in the private sector. This category includes:
- Workers with a subordinate contract (fixed-term, indefinite or apprenticeship).
- Collaborators with CO.CO.CO. contracts
- Occasional self-employed workers and administrators.
Public employees are excluded, since the discipline on fringe benefits does not apply to them.
There are no income limits or ISEE thresholds for receiving fringe benefits, but the decision to provide them is solely up to the employer, who can choose to grant them based on company policies or through collective agreements.
Fringe Benefit Taxability Limits
According to article 51, paragraph 3 of the TUIR, fringe benefits are not subject to taxation within the threshold of 258.23 euros per year. If this limit is exceeded, the full amount of the benefit becomes taxable and subject to taxation and
social security contributions.
For the years 2024 and 2025, the Budget Law raised these thresholds:
- 2,000 euros for workers with children.
- 1,000 euros for workers without children.
These thresholds apply to all private sector employees, and exceeding the threshold involves taxing the full amount of the fringe benefit.
How Do Fringe Benefits Work?
Fringe benefits are a part of the compensation that is not paid in cash, but through goods or services. Companies may decide to provide these benefits to specific categories of employees, such as additional benefits for the tasks performed. They fall within what is defined as corporate welfare, that is, the set of services and benefits that improve the well-being
of workers.
The provision of fringe benefits is not mandatory and depends on company policies. Among the most common benefits are:
- Company car.
- Food stamps.
- Insurance policies.
- Electronic devices such as PCs, smartphones or tablets.
- Shopping vouchers.
What’s Not Included in Fringe Benefits?
Fringe benefits do not include certain services specified in article 51, paragraph 2 of the TUIR, known as flexible benefits, which include:
- Refunds for school fees and textbooks.
- Recreational trips and vacations.
- Preventive and diagnostic medicine.
These benefits do not contribute to the formation of the worker’s income and are governed by a different tax regime.
Calculation of Fringe Payroll Benefits
The value of fringe benefits is calculated based on the cost of the good or service provided and divided by 12 months. This amount is entered in the employee’s paycheck and helps form income only if the expected tax-free thresholds (1,000 euros or 2,000 euros) are exceeded
.
If the value of the benefit exceeds the tax-free limit, the entire amount is taxed and subject to a social security contribution.
How to Apply for Fringe Benefits
To obtain fringe benefits, workers must apply to their employer. In the specific case of the 2,000 euro bonus for employees with children, it is necessary to provide the tax code of the dependent children to prove the right to receive the benefit.
Fringe benefits represent an increasingly important component of compensation, especially for private sector workers. With the changes introduced for 2025, these benefits will be even more advantageous, especially for those who have children or agree to move
for work.
