Salary in kind: board, lodging and company car
Not all salary goes through the bank account. When the employer provides accommodation, meals or a car that can also be used privately, they are paying part of the remuneration in kind. The tax authorities and social funds treat it as income in every respect: it must be valued, made subject to contributions and reported in the salary certificate. Ignoring it is one of the most frequent — and most costly — mistakes in payroll.
What salary in kind is
It is any benefit the employer grants to the employee in a form other than money and that has an economic value: free or reduced-rent accommodation, board, a company vehicle usable in free time too, and in some cases the coverage of private expenses. The principle is simple: if the employee obtains a financial advantage, that advantage is taxable income and subject to AHV/IV/EO, ALV, BVG and UVG contributions (old-age, disability, income-compensation, unemployment, occupational pension and accident insurance) just like cash salary.
Board and lodging: flat-rate values
For board and lodging there is no need to estimate case by case: there are flat-rate values set at federal level for the social insurances, differentiated between adults and people in training. In general terms a distinction is made between:
- individual meals (breakfast, lunch, dinner);
- full daily board;
- lodging (a room) and board and lodging combined.
These flat-rate amounts serve as the basis both for social contributions and, as a rule, for taxation. The advantage is certainty: by using the official values you do not have to justify an estimate. If you know the exact amount in force for the reference year, apply it; when in doubt, start from the published flat rates and do not improvise figures.
The company car: the trickiest part
The company vehicle is the most common case and the one most often handled wrongly. If the car serves only for professional travel, there is no salary in kind. But if the employee can also use it in their free time, that private share is income.
Practice provides for a monthly flat-rate share calculated as a percentage of the vehicle’s purchase price (excluding VAT), for each month, with a minimum amount. This share:
- must be added to the taxable salary;
- is subject to social contributions;
- is entered in a dedicated box of the salary certificate.
The alternative is to keep a logbook documenting actual use and allocating professional and private precisely. In the absence of documentation, the authority applies the flat rate: it is best to decide in advance which method to use and to stay consistent.
How to report it in the salary certificate
The salary certificate has boxes dedicated to benefits in kind. In short:
- board and lodging are added to the gross salary;
- the company car has a specific box for the private share;
- other non-cash benefits must be declared separately.
The classic mistake is to pay contributions only on the cash part and leave the benefits in kind out: at the first inspection by the compensation fund the missing contributions are claimed retroactively, with interest, and the employer is liable.
The mistakes that cost
- Forgetting the private share of the car: it is the most frequent adjustment in inspections.
- Not subjecting board and lodging to contributions, treating them as a mere perk.
- Estimating by eye instead of using the official flat rates.
- Not filling in the boxes of the salary certificate relating to benefits in kind.
- Changing method (flat rate/logbook) during the year without consistency.
Why it pays to get it in order
Salary in kind is not a detail: it affects the contribution base, the BVG and the employee’s taxation. Handled badly, it generates arrears and disputes; handled well, it is a transparent remuneration tool and fully deductible for the company. The key is to value it with the official criteria from the very first payslip.
How we help you
SIH ONE’s Payroll division integrates benefits in kind into the payroll: valuation of board, lodging and car, correct subjection to contributions and reporting in the salary certificate, so that every payslip stands up to inspection. Entrust us with your payroll.