The employee should almost always choose a lunch allowance instead of money, if it is possible, advises Kati Malinen of the Finnish Taxpayers Federation.
The employer the lunch allowance offered is one of the most used fringe benefits.
The largest companies offering lunch allowance services in Finland are Edenred, Smartum and Epassi.
Although lunch benefits are popular, their use has not quite returned to the level of the peak years. According to the statistics of the Tax Administration, ten years ago there were still 295,000 people using the lunch allowance, in 2022 only 282,000. One of the reasons for the decrease in the number of people using the lunch allowance is remote work.
“According to our statistics, employees eat lunch in the restaurant 3–4 days a week and 1–2 times a week elsewhere,” says Epassi Finland's CEO Niklas Löfgren.
According to Edenred, the temporary dip in user numbers during the corona period is over, but the behavior of lunchers has changed.
“With the increase in remote work, ordering lunch with a food delivery service has become more common, 46 percent of Edenred's customers use delivery services for lunch,” says Edenred's working life expert Laura Lahtinen.
But how does an employee get the best possible benefit out of the lunch allowance? If there is a choice, should you take the lunch allowance on top of your salary or from your salary? Or would it be worth giving up the lunch allowance altogether?
It is impossible to give an exact answer, because it depends on what the person's eating habits are. If you always eat yesterday's leftovers at home, it is clear that the lunch allowance is not useful. If instead you eat lunch sometimes at home and sometimes at a restaurant, it's more complicated.
Legal director of the Confederation of Taxpayers Kati Malinen says that it is almost always more profitable for the employee to take the lunch allowance than the replacement money if the habit is to eat more expensive lunches.
This is because the use value of the lunch allowance is greater than its tax value, and taxes are reduced compared to the payment of a cash wage only.
“Because the lunch given as a lunch benefit can be bought at a lower price than the market value, the eater has more money in his hand than if he took a salary only as a cash salary and after taxes paid for the same price lunch from his own salary.”
The lunch benefit is a tax-supported benefit. The employer can offer a lunch allowance either as a benefit in kind on top of the cash salary or as a lunch deduction. The costs of the lunch allowance are usually divided so that the employer's share is 25 percent and the employee's 75 percent.
“
“It also accumulates a pension.”
If can choose whether to take the lunch allowance paid on top of the cash salary or as a deduction from the net salary, according to Malinen, you should choose the benefit paid on top of the cash salary.
“Whenever you can get a lunch allowance on top of your cash salary and it's useful, it's worth taking it, because it's practically a salary increase. Plus it also accumulates a pension.”
The Tax Administration's leading tax expert Mervi Hakkarainen says that this method is indeed one of the most common ways to use the lunch allowance.
“The employee receives a lunch allowance on top of the cash salary, and tax is paid on it. That is, if the nominal value of the lunch allowance is 13.50 euros, the taxable value of the benefit is 10.13 euros. 10.13 euros is added to the salary, and the employee pays tax on this amount.”
The tax is taken according to the employee's personal tax rate.
Second the way to give a lunch allowance is a lunch deduction, in which case the employer collects the tax value of the lunch allowance, i.e. 75 percent, from the employee's net salary.
In this case, for example, lunches eaten by employees using Epass will be charged from the following month's salary according to the actual use. If the lunch allowance is not used, no deductions are made from the salary.
The tax administration determines the tax value of the meal benefit, i.e. the lunch benefit, every year. This year, the minimum value is 8.50 euros, which means in practice that the employee must pay at least that much for lunch.
The maximum amount of the nutritional allowance is 13.50 euros per working day. A deductible of 75 percent means that the employee pays 10.13 euros for his lunch himself and the employer 3.37.
The lunch allowance can also be used on vacation or on weekends, but each use will be deducted from the number of uses for that year. This year, by default, the lunch allowance can be used a maximum of 237 times. In this case, the employee can benefit from a lunch allowance of almost 800 euros per year.
The lunch allowance can also be given so that the taxable value is deducted from the gross salary. Taxes are paid and pension accrues in this case from the total amount of the tax value of the cash salary and fringe benefits. According to Malinen, the benefit for the employee is the same as a deduction from the net salary.
However, a deduction from the salary is always a worse option for the employee than a benefit paid on top of the cash salary.
“When the benefit comes on top of the monetary salary, it is a question of a salary increase. If you don't take the benefit, and this doesn't affect the monetary salary, you practically refuse the salary.”
According to Malinen, this should only be done if the benefit is not used completely, because otherwise you have to pay taxes on the benefit that is not used.
Remote work benefits may not be used, and then the benefits achieved may be lost. This applies to lunch vouchers or lunch cards that have been loaded with money and the right to use them expires.
According to Edenred's Lahtinen, few benefits
are currently being used. Lahtinen thinks that one of the reasons is inflation and rising food prices.
“Also, the change in employee benefits from paper notes to digital solutions has increased the use of lunch benefits.”
No money is lost in the lunch setup system used by Epass, because the application is loaded with access rights, not money.
“A lunch allowance is allocated to the beneficiary, and Epassi invoices a small advance from the employer,” says Löfgren.
This means that the employee has the right to eat one lunch per working day, but the money has not necessarily been billed for the entire amount. According to Löfgren, beneficiaries are loaded with new access rights every month and the balance of the unused benefit is always taken into account in billing.
“The beneficiary will not have money deducted in advance from the salary. The beneficiary and the employer only pay for the lunches eaten,” says Löfgren.
From the taxman's point of view, whether a benefit remains unused or not is irrelevant, because the taxes on it have already been paid.
“An employee can influence the amount of taxable income by accepting a balance from the employer only to the extent that he uses the benefit,” advises Hakkarainen.
#Money #lunch #allowance #option #salary #increase #benefit
