In today’s global market, access to diverse talent is more important than ever. To tap into the fullest of human potential, companies must offer competitive perks. Yet, the needs and wants of global talent can be entirely different depending on location.
Including benefits in kind, or non-cash, supplemental benefits in your global expansion strategy can improve employee engagement, talent retention, and business outcomes. With the right Employer of Record (EOR) solution, companies can access the tools and expert guidance to streamline global HR, payroll, benefits, and more – quickly and compliantly.
What are in-kind benefits?
In-kind benefits, also known as benefits in kind, fringe benefits, supplemental benefits, or perks, are non-cash benefits that an employer offers to employees in addition to their salary. While they are non-cash, these benefits have monetary value. In-kind benefits are considered part of an employee’s total compensation package, along with base salary, commissions (if applicable), bonuses, and other perks.
From stock options to private health insurance, in-kind benefits cover a range of perks. Some common in-kind benefits examples include:
- Company car
- Gym memberships
- Private health insurance
- Retirement plans like 401(k) and matching monetary contributions
- Tuition coverage
- Pet insurance
- Mobile phone for personal use
- Non-business travel or entertainment expenses
- Relocation assistance
- Workspace for hybrid or remote work
Are benefits in kind mandatory?
Benefits in kind are not universally mandatory. So, how do benefits in kind work? It depends on the laws in your target country and other factors like industry regulations and employment agreements.
Keep in mind that while employers are not legally required to provide benefits in kind, offering them can be a competitive advantage for attracting and retaining talent.
With G-P’s #1 EOR solutions like G-P Meridian Prime™, you can compliantly manage both mandatory and benefits in kind.
The key to a well-rounded global hiring strategy is identifying which benefits your company is mandated to offer, and which are considered supplemental as additional, attractive incentives. Here are a few examples of benefits that are mandatory in some countries and provided as supplemental benefits in others:
1. Private insurance
In countries like Dubai, private insurance is mandatory. However, in many countries it is not, and is a highly sought-after perk. Health insurance benefits typically cover medical, dental, and vision expenses in the United States.
An employer might also offer a more comprehensive health insurance plan covering surgeries, hospital stays, or other preventative care needs and mental health services. For instance, a company might cover a percentage of medical costs, with employees paying the remaining balance.
2. Parental leave
The United States is one of the few countries where parental leave is treated as supplemental, as the country does not mandate any paid leave for new parents. It is mandatory in countries like Estonia to offer more than a year and a half of paid parental leave. Other countries like Bulgaria, Japan, and Slovenia offer a year’s worth of paid leave.
3. Retirement plans
In the United States, some states have mandatory government-sponsored retirement plans. In other states, while not mandatory, companies usually offer retirement plans such as 401(k) as incentives.
4. Education assistance
Education assistance may be one of the most valuable incentives to attract and retain workers. After all, 2024 global workforce trends indicate companies can successfully position themselves to succeed by upskilling their workforce.
Also known as tuition reimbursement or tuition assistance, education assistance is when a company covers a percentage of an employee’s education expenses. Generally, this is provided as a supplemental benefit, but employers in France, for example, have a legal obligation to finance continuing training for employees.
5. Relocation expenses
Covering relocation expenses is a common supplemental benefit used to attract global talent. Once a nontaxable perk in addition to salaries, some countries treat reimbursement for moving expenses as a taxable fringe perk.
Costs associated with any travel or relocation reimbursement are subject to income tax as employee compensation. In some countries, companies can deduct the cost of providing this benefit to their workforce.
Are benefits in kind taxable?
Certain benefits in kind can face tax liability depending on the specific country you conduct business in. Benefits in kind are generally considered taxable, as they contribute to an employee’s overall income. However, which benefits in kind are taxed and which are tax-free ultimately depend on each country’s tax code.
In most cases, benefits that are built for personal use or provide personal gain to employees are taxable income. Remember: Even if a benefit isn’t taxable for a specific employee, your business might be able to write off the cost of providing that benefit.
Some common taxable benefits include:
- Gym memberships.
- Relocation or long-term moving expenses.
- Non-business entertainment or travel expenses.
- Non-business housing or meals.
- Performance bonuses.
In most countries, common nontaxable benefits include:
- Qualified retirement contributions.
- Group-term life insurance.
- Disability Insurance
How do employees pay tax on benefits in kind?
How taxes are paid depends on local rules. Taxes might be deducted from the salary or paid separately. It’s essential for both employers and employees to understand how these benefits are taxed to ensure compliance with local tax laws.
It’s important to follow local regulations for benefits in kind to avoid tax misfiling. What may be taxed or tax-deductible in the United States might not be in Ireland, Nigeria, or Costa Rica. An Employer of Record (EOR) can help ensure your tax and payroll processes adhere to local laws, so your teams receive their benefits in kind compliantly.
While most countries require employers to report and pay taxes on benefits in kind to the local tax authorities and to ensure proper documentation, your company has responsibilities for certain benefits. For example, in Ireland, employers are responsible for ensuring that payroll taxes are applied to liable benefits in kind for employees at source.
How to payroll benefits in kind with an Employer of Record (EOR)
To payroll a benefit in kind, you include the estimated cash equivalent directly in the employee’s regular payroll, simplifying tax deductions. The cash equivalent refers to the cash value upon which an employee or company will pay tax for the provided benefit in kind.
While payrolling benefits in kind can sometimes be optional for employers, local tax regulations are always changing. For instance, in the UK, payrolling benefits in kind will become mandatory starting April 2026. Understanding the local laws and regulations surrounding employee benefits in each country is crucial to offering benefits in kind compliantly.
A reliable EOR solution like G-P simplifies the process of managing taxes related to compensation packages, regardless of the region. With in-country global experts on employment law, compensation, and mobility, G-P can ensure compliance in every country for your global expansion.
How are cash transfers different from in kind benefits?
While a benefit in kind is a non-cash benefit, a cash transfer consists of liquid cash that employees can spend on goods or services of their choosing.
Two examples of cash transfers are employee bonuses, often given as a performance incentive or profit-sharing measure, and employee expense reimbursements, where companies reimburse employees for approved business expenses like travel or meals.
Manage every aspect of compensation with G-P today.
Don’t let the stress of compliance slow your plans for global success. Attract top talent by offering competitive, up-to-date benefits that meet all country-specific rules and norms.
A best-in-class Employer of Record (EOR) like G-P empowers businesses to take on global expansion with total confidence. Our network of trusted partners in payroll and HCM provide the reliability, compliance, and stability you need to build global teams, offer benefits in kind to local employees, and attract top talent.
Plus, with our dedicated team of experts on employment, tax, benefits, and local labor laws, G-P takes on complex compliance challenges, so you don’t have to. Together, your businesses can grow beyond borders and boundaries with peace of mind.
