Employee Benefits: What Are They and What Are Their Tax Advantages?

Employee benefits may include, for example, lunch vouchers, commuting benefits, and private health insurance. These kinds of perks help attract and retain employees, and they also come with tax advantages that are important for both employers and employees to understand.

Some employee benefits are tax-free, while others are partially or fully taxable. The taxation of these benefits affects both the employer’s costs and the employee’s net income. When companies understand the tax regulations related to employee benefits, they can make informed decisions and ensure that the benefits are handled in a tax-efficient and lawful manner.

In this article, we will explore what employee benefits are and how they are taxed in Finland.

What are employee benefits and why are they important?

Employee benefits are perks offered in addition to monetary compensation that support employees’ financial security, health, and overall well-being. In Finland, employee benefits are divided into two categories: statutory (mandatory) and voluntary. Statutory benefits are based on legislation, while voluntary benefits are additional perks provided at the employer’s discretion.

Well-designed employee benefits can significantly improve workplace atmosphere and productivity. They foster a sense of security, increase job satisfaction, and can motivate employees to perform better. When employees feel valued, their commitment grows—leading to reduced staff turnover.

Employee benefits offer many advantages for small and medium-sized enterprises (SMEs):

• Attracting and retaining skilled employees: Competitive benefits can strengthen recruitment and employee retention.

• Boosting job satisfaction: Good benefits enhance motivation and engagement.

• Promoting employee well-being: For example, occupational health services can reduce sick leave and improve work ability.

• Utilizing tax advantages: Certain benefits come with tax incentives that help manage overall company costs.

In short, well-planned employee benefits support both employee well-being and business success.

Types of Employee Benefits 

Statutory Employee Benefits

Statutory employee benefits ensure security and well-being for employees. Employers are obligated to provide these benefits, which include occupational health care, pension insurance, unemployment insurance, and accident insurance. Each benefit has its own funding model and tax implications:

• Occupational health care is mandatory for employers and aims to promote work ability and prevent occupational illnesses. It may also include medical care, depending on the employer’s decision.

• Pension insurance (TyEL) applies to all employees aged 17 and over, securing income after retirement.

• Unemployment insurance provides financial security in case of unemployment and is funded by both employer and employee contributions.

• Accident and occupational disease insurance covers work-related injuries and illnesses.

Voluntary employee benefits

Voluntary employee benefits provide broader financial and well-being support beyond the statutory minimum. They help employers attract and retain skilled employees and enhance job satisfaction.

Some companies offer additional benefits such as supplementary health services, which may include dental care, physiotherapy, and mental health services. These can be provided through platforms like Terveysetu, which acts as a payment method for various health services and can be used via a virtual Edenred card for mobile payments.

The lunch benefit (commonly known as “lounari”) makes it easier for employees to have meals during the workday. Employers can support meals through lunch vouchers, electronic payment methods, or workplace dining options.

The Virike benefit promotes employee well-being by offering opportunities to engage in physical activity and cultural events. This benefit may cover gym memberships, sports club fees, concert tickets, and museum visits.

Want to offer your employees flexible and tax-free benefits that support their well-being? Explore Edenred’s diverse employee benefit solutions to find the best fit for your company’s needs.

Voluntary employee benefits improve employee well-being and strengthen a company’s appeal in the job market.

Taxation of Employee Benefits

Taxable employee benefits

The lunch benefit is one of the most common taxable employee benefits. Its taxable value is based on the employer’s cost. In 2025, if the meal cost falls between €8.60 and €13.70, the taxable value is fixed at €8.60. If the cost exceeds this range, the entire meal becomes a taxable benefit. The employee must report it as taxable income, while the employer can deduct it as a business expense.

A company car is a taxable benefit if it is also used for private driving. In 2025, the taxable value is 1.5% of the car’s purchase price plus €300 per month, if the car was registered between 2022 and 2024.

Employer-provided housing is a taxable benefit, with its value determined by the location, size, and amenities of the apartment. In central Helsinki, the taxable value is €299/month plus €13.20 per square meter.

A mobile phone benefit arises if the employer-provided phone is also used for personal purposes. The taxable value is a fixed €20/month, unless the phone is strictly for work use.

While taxable benefits increase the employee’s taxable income, they also offer valuable perks that employers can deduct as business expenses.

Tax-free employee benefits

Certain employee benefits in Finland are tax-free, meaning employees do not have to pay income tax on them. This also benefits employers, as many tax-free benefits are deductible as business expenses. To qualify for tax exemption, the benefits must be equally available to all employees, be ordinary and reasonable, and not convertible into cash.

Occupational health care is a tax-free benefit for employees. It includes preventive services such as health check-ups, monitoring of work ability, and rehabilitation if needed. If an employer offers services beyond the statutory minimum, they can remain tax-free as long as they are reasonable and available to all employees. Sports and culture benefits are also tax-free if they meet these conditions..

Employers may also support commuting costs tax-free by purchasing or reimbursing public transport tickets. In 2025, the maximum tax-free amount is €3,400 per employee per year. This can be implemented by directly purchasing tickets or reimbursing season passes. As long as the benefit stays within the limit, it is tax-free for the employee and deductible for the employer.

The company bicycle benefit is an increasingly popular tax-free perk that employees can use for both commuting and leisure. In 2025, the tax-free limit is €1,200 per year per employee. However, the combined tax-free limit for the bicycle and commuting benefits is €3,400 per year. This applies to both regular and electric bikes. With services like Edenred Fillari, this benefit can be easily managed without hassle.

Tax-free employee benefits reduce employees’ costs and can offer significant financial advantages to employers.

Summary

Employee benefits are an effective way to attract and retain talent while promoting employee well-being. Both statutory and voluntary benefits play a significant role as part of total compensation. It is important for employers to understand the taxation related to different benefits to ensure they are provided cost-effectively and in compliance with tax regulations. Well-designed employee benefits can offer financial advantages to both employers and employees.

Would you like to optimize your employee benefits and take full advantage of tax-free options? Explore Edenred’s flexible solutions and find the benefits that best suit your company’s needs!

Frequently Asked Questions

What are employee benefits?

Employee benefits are additional perks provided by the employer, such as lunch benefits, commuting support, and sports and culture benefits.

What are the three most desired employee benefits in Finland? The top three most popular employee benefits in Finland are:

• Occupational health care – often tax-free and highly valued.
• Lunch and meal benefit – allows employees to enjoy affordable meals.
• Employer-provided bicycle – an increasingly popular benefit that promotes well-being and sustainability, with tax advantages for commuting.

Are employee benefits deducted from salary?

Many employee benefits are tax-free or partially taxable and are not usually deducted directly from salary. Employers may offer lunch, commuting, and recreational benefits that include a small employee co-payment.

Taxable benefits, such as company cars and housing, have a taxable value but do not reduce net salary directly—they affect total income taxation. 

What are the tax advantages of common employee benefits?

Many employee benefits offer tax advantages:

Lunch benefit is partially tax-free: the employee pays part of the meal, and the employer’s share is considered taxable income. In 2025, the taxable value is €8.60 per meal if the employer’s cost is between €8.60 and €13.70.

• Commuting benefit is tax-free up to €3,400 per year.
• Sports and culture benefit is tax-free up to €400 per year.
• Employer-paid health insurance and occupational health care are tax-free.
• Bike benefit is tax-free up to €1,200 per year.