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The Tax Scheme for Income in Kind and Benefits
The Ministry of Finance released on the 6th of October the Circular 1219/2014 regarding the tax treatment of income provided in kind by companies to employees and employees’ relatives.
More analytically, if the market value of income in benefits exceeds 300€, according to employer’s books and records, the taxable income of the employee (or shareholder or partner) shall be increased by this amount. In accordance with par. 1 of art. 13 of L. 4172/2013, benefits in kind should be considered:
· The vouchers for the purchase of goods.
· The use of corporate credit cards and mobile accounts for personal rather than corporate needs.
· The benefits provided to employees, directors, managers and retirees of companies providing electricity, telephone, water supply, gas supply etc.
· School and nurseries tuition fees etc.
Courtesy of company car
Based on par. 2 of art. 13 of L.4172/2013, the courtesy of a company car to an employee, partner or shareholder is also considered as a benefit in kind, the value of which is calculated at the 30% of the annual car expenses:
· Road tax
· Repair and maintenance cost
· Lease or mortgage payments
Cars provided to dealers and technicians or used for test driving or transportation of stuff etc, are excluded from the abovementioned regulation.
Loans granted to employees, shareholders or partners constitute in-kind benefits and are appraised as the difference between the market interest rate (see also Circular 1034/ 30-01-2014) and the agreed interest rate. If there is no written agreement, the principal loan is considered as benefit in kind.
The value of the stock options is specified at the time of exercise or sale of the option and not at the time of grant. The valuation is calculated as the difference between the stock market closing price and the option price (par. 4 of art. 13 of L.4172/2013).
Courtesy of residence
According to par. 5 of art. 13 of L. 4172/2013, in the case of residence concession to an employee, shareholder or partner, the benefit in kind is the total rent paid directly to the landlord. Otherwise, if the residence is owned by the employer, the benefit in kind is valued at 3% of the objective value annually.
The accountants or the responsible executives for payroll clearance shall take seriously under consideration the changes in the tax treatment of benefits in kind and include the relative amounts in employees’ remuneration packages. However, in many confusing cases, taking advice from external tax partners – consultants is almost necessary.