Although the distinction between the two seems simple, in many cases the distinction is sometimes complex. So, in the case of the vehicle. This becomes a benefit in kind if the employee can use it privately but corresponds to professional expenses if the employee uses it as part of his professional activity. What then are the differences between benefits in kind and professional expenses?
Definition of benefits in kind and professional expenses
Benefits in kind refer to benefits provided by the employer to employees, where the company covers the employees’ personal expenses. These benefits can take various forms, such as the provision of housing, a vehicle, meals or even reimbursement of personal expenses, such as healthcare.
Professional expenses, for their part, are expenses directly connected to the exercise of the employee’s work or profession. These are costs incurred for the performance of professional activities, such as travel expenses, meals consumed during business trips, purchase of specific equipment, etc.
Importance of the distinction
It is essential to clearly distinguish benefits in kind from professional expenses, because this distinction has significant fiscal and social implications. Benefits in kind are often subject to social security contributions and income taxes, while business expenses are generally exempt from such charges.
Errors or omissions in the management of benefits in kind and professional expenses can have significant consequences. The tax administrations and Urssaf verify the declarations and pay slips.
Attention! Errors in the pay slip or even omissions are checked by the tax administration and Urssaf since the employer must be able to justify the compensation of professional expenses if he wants to be able to request exemption from social security contributions.
Necessary documentation
To benefit from the exemption from social security contributions on professional expenses, the employer must be able to justify these expenses. This involves maintaining evidence, such as expense reports, invoices or mileage records, to demonstrate that these expenses are directly related to the employee’s professional activity.
In summary, it is crucial to understand the distinction between the two, as it has important tax and social security implications. Employers and employees must be aware of these rules and ensure appropriate management of these elements to avoid any problems with tax and social authorities.
