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How are Fringe Benefits calculated?

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Overview

“Fringe benefit” means any benefit provided or deemed to be provided by reason of an employment or office. Fringe benefits can be classified into three categories:

  • CAT1
  • CAT2
  • CAT3

Contents

  1. CAT1 - Car Cash Allowance
  2. CAT1 - Use of Company Car
  3. CAT2 - Use of Assets, Accommodation, and related costs
  4. CAT3 - Other Benefits
  5. Prorata calculations
  6. How are Fringe Benefits taxed?

CAT1 - Car Cash Allowance

    • The annual fringe benefit value is the amount of the cash allowance reduced by 50%, provided that the reduction in any calendar year cannot exceed €1,170. Any additional Car Benefit over and above this value will be fully taxable. In the case where the maximum amount has been consumed partially or fully during the previous employment, the remaining eligible amount will be taxed accordingly.
    • This Fringe Benefit will be taxed at 50% per month until the threshold is reached. Once exceeded, the Fringe Benefit will be taxed at 100%. For more information on the tax capping, check this out. 

CAT1 - Use of Company Car

    • This is fully taxable and added to the Gross but not the Net. This benefit is not received as income but as the use of the actual car.

CAT2 - Use of Assets, Accommodation, and related costs

    • This is fully taxable and added to the Gross but not the Net. This benefit is not received as income but as the use of the actual accommodation or asset.

CAT3 - Other Benefits

    • This is fully taxable and added to the Gross but not the Net. This benefit is not received as income but as the use of the actual benefit given.

Prorata calculations

Benefits and Allowances are to be paid according to working days rather than calendar days, since they are not salaries but are given because of work duties. 

The value per benefit is calculated pro-rata based on the number of hours worked. Therefore, if an employee worked less hours within a month, has unpaid leave, or has worked less hours due to their job schedule (ex. Part-Time), the amount due will be less than the full amount.

Calculation: 

Full time

(Amount of annual benefit/number of months within one year) * (Number of days worked by employee/workdays within that month)

Ex. (€2000/12)*(8/23) = €57.97 

How are Fringe Benefits taxed?

Taxable Fringe Benefits are taxed at the standard tax rates. If an employee is set up to be taxed under the 10% part time tax rates, but has a fringe benefit as part of their salary package, the tax for the fringe benefit is based on the standard tax rates, rather than on the part time rates.

For information on how to add benefits to Talexio, click here.

Official resource: Fringe Benefits Tax Guidelines

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