What are fringe benefits and how the exemption limit works

In recent years, the exemption limit of fringe benefits has changed several times: but what are they and what are the parameters to benefit from the subsidized treatment? The envisaged rules and future prospects

In view of the inauguration of the works for the 2024 Budget Law, the innovations for the recognition of the fringe benefits for male and female employees by employers and in particular on the exemption limit envisaged.

According to the legislation in force, the amount of recognized bonus does not contribute to the formation of income within certain thresholds.

But what are the benefits that can be considered fringe benefits and what are the parameters for applying the facilitated treatment?

The rules envisaged when fully operational and future prospects.

Fringe benefits: what are they and what advantages do they provide?

They can define themselves fringe benefits payments in kind. These are forms of additional pay recognized to female and male employees consisting of goods and servicesto which is added the disbursement of cash sums envisaged in some cases.

Any examples? The concession of the car or mobile phone for promiscuous use or even the granting of loans to
advantageous conditions they are fringe benefits.

Unlike other forms of corporate welfare, they can be recognized ad personam by the employer without special agreements.

To make it even more advantageous i recognized bonusesis thetax and social security exemption provided within certain limits.

Article 51 of the Consolidated Income Tax Law reads:

“The value of the goods sold and the services provided does not contribute to forming the income if the total amount does not exceed 500,000 lire in the tax period”

When fully operational, therefore, the threshold to be respected in order to benefit from the facilitated treatment is equal to 258.23 euros.

Within this figure, the amounts in the paycheck, the recognized goods and services, are not taxed, with an advantage for those who receive them.

Fringe benefit and exemption limit: how does it work?

In recent years there have been this regulatory passage several interventions which have broadened the range of action of the fringe benefits both in terms of amount that in terms of type of additional salary eligible for benefits.

In 2022, in addition to the value of the goods sold and the services provided to employees, also the sums paid or reimbursed for the payment of Household utilities of the water service, electricity and natural gas have become part of the basket of fringes exempt benefits extended to the sum of 3,000 euros.

The confirmation has arrived also for 2023 but only for male and female employees with dependent sons or daughtersincluding recognized children born out of wedlock, adopted or fostered children.

Respecting the set limit is essential to benefit from the facilitated treatment: in case of exceeding the thresholdin fact, the overall value of goods, services and amounts paid contributes overall to the formation of income. The benefit lapses for the entire amount and not just for the excess. There taxation it therefore applies to the entire value.

Fringe benefit, news coming soon for the exemption limit

The latest decisions on exemption limit envisaged for fringe benefits and the amount envisaged when fully operational, much lower, indicate the need to intervene on the foreseen rules. Without implementing new interventions from 2024, the maximum ceiling will return to 258.23 euros for everyone.

But the intentions declared by the Government go in the direction of one revision of the reference rules.

This perspective is also part of the tax reform project and the first indiscretions on the Budget Law they already suggest an increase in currently expected values with a double track confirmation for male and female workers with or without children and more favorable treatment for the former.