Employee fringe benefits in 2022 from the taxation perspective

Employers use fringe benefits to motivate employees to perform better as well as to differ themselves from the competitors. What does the provision of various fringe benefits mean for the employer and employee in terms of taxes? What changes are coming into force in 2022 in fringe benefits?

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16 November 2021

As of 2022, Income Tax Act introduces changes in fringe benefits for employees. Fringe benefit will be exempted from employees’ income tax and related health and social insurance contributions in the amount of maximum € 500 for the tax period from all employers.

To apply the exemption of fringe benefit from taxation, the following conditions must be met:

  • Benefit has to have character of employment income as per the Income Tax Act and be provided in in-kind form;
  • It is fringe benefit other than those considered as an income not subject to income tax according to Article 5 paragraph 5 and 6 of the Income Tax Act;
  • It is not categorized as an income exempt from tax as per specific stipulations of the Income Tax Act (e.g. competition prize, provision of transport to work);
  • From the employer’s perspective, the fringe benefit is not provided from the social fund and is treated as tax non‑deductible expense;
  • The amount of fringe benefit from all employers does not exceed the total amount of € 500 per year.

If the value exceeds € 500, only the amount above this limit is to be taxed on the side of an employee.

The most common forms of fringe benefits are cafeteria systems, teambuildings, tickets for various events, membership cards, payment of employee's life insurance, business cell phone for private purposes and many others.

The exemption of the fringe benefits effective from 2022 is not conditioned by the duration of the employment, size of the company, type of business activity of the employer or number of employees. Whereas the provisions on exemption of fringe benefits does not refer to the Labour Code, the definition of employee as per the Income Tax Act should be applied. Thus, even shareholder/limited partner/managing director who does not have an employment contract with the company can be considered as an employee for the purposes of this exemption.

In case the fringe benefit is provided by the employer voluntarily without being this obligation stipulated in the employment contract concluded with the employee, collective agreement, or internal procedure, it will be exempted from tax up to the amount of € 500 for the tax period.

Exemption from employee’s income tax will be applicable also for fringe benefits up to € 500 if the employer provides them based on an employment contract or internal regulation however, only if they will not be recognized as a tax-deductible cost by the employer.

Should the employer decide to consider the expenses for the fringe benefits as tax deductible, the right for the fringe benefits needs to be mentioned in an employment, or other similar agreement or employers’ internal procedure and at the same time subject to taxation and social and health insurance contributions on the employee's side.

You can find below the conditions of taxation of the most frequent benefits offered by the employers, or download the complete newsletter at the bottom of this page.


Employee fringe benefits 2022
Employee fringe benefits 2022