Extra-Salary Benefits – Vacation Reimbursement in 2024
As the holiday season approaches, many employers are considering the possibility of offering the most tax-advantageous salary benefits. Thus, employers have two options: either providing holiday vouchers or reimbursing vacation expenses.
Benefits in the Form of Holiday Vouchers
These can be granted at any time during the year. Income tax (10%) and health insurance contribution (10%) are calculated on their value, and the expenses are deductible for the employer. Essentially, for holiday vouchers, no social insurance contribution (CAS) or labor insurance contribution (CAM) is owed.
The Fiscal Code sets a ceiling up to which only income tax and health insurance contribution apply, namely the equivalent of up to six minimum gross base salaries guaranteed in payment during a fiscal year.
For the year 2024, the maximum ceiling is 19,800 lei. Thus, if holiday vouchers exceeding this ceiling are granted, the difference will be treated as a benefit in kind and will be subject to all salary taxes and contributions.
Advantages
Holiday vouchers are not included in the calculation of the global monthly benefit ceiling of 33% of the gross base salary.
Compared to granting a bonus, the employee benefits from lower taxation since holiday vouchers do not fall within the scope of social insurance contribution (CAS).
The deductibility ceiling is generous, much higher than in the case of reimbursing vacation expenses.
Disadvantages
The disadvantage for the employee, related to the use of vouchers, is that they can only be used domestically.
Reimbursement of Tourism and/or Treatment Services
An alternative to holiday vouchers is the reimbursement of tourism and/or treatment services, including transportation, during the leave period, for the employees and their family members.
This benefit is fiscally deductible for both employee and employer, as long as it falls within the annual ceiling equal to the average gross salary used for the social insurance budget, namely 7,567 lei in 2024.
Emergency Ordinance no. 115/2023 states: “Amounts representing the equivalent value of tourism and/or treatment services, including transportation, during the leave period, for their own employees and their family members, under the conditions of paragraph (41) letter d), are considered income for the month in which the reimbursement is approved, or income for the month in which they are granted, in cases where there is no obligation to present supporting documents.”
To grant this benefit and apply the tax facilities, it is necessary to regulate the granting conditions either in the individual employment contract or in the internal regulations.
The exemption from salary taxes for the reimbursement of tourism services will not apply starting January 2024, if employees also receive holiday vouchers.
Advantages
The advantage, compared to holiday vouchers, is that the employees can take their vacation anywhere, both domestically and abroad, including expenses for family members, such as accommodation and/or treatment, as well as transportation costs.
Disadvantages
The value of this benefit must also fit within the global monthly ceiling of 33% of the base salary, along with other benefits the employee receives in that month.
Expenses must be justified by the employee with documents.
The deductibility ceiling is significantly lower than for holiday vouchers.
Article written by Carmen Olaru, Payroll Partner – Nowium Tax&Finance
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