Social Security Contributions on Benefits in Kind: The Current Framework and Contemporary Issues

Benefits in kind granted by businesses to employees constitute one of the most complex and widely discussed issues in both taxation and social security law. The complexity arises because their tax treatment under Article 13 of Law 4172/2013 (Income Tax Code – ITC) does not always coincide with the manner in which social security legislation interprets “earnings.” At the same time, administrative practice and accounting interpretations are not always uniform, leading to reasonable uncertainty.

This article provides a concise overview of the current framework and highlights the issues that remain unclear.

Tax Point of Reference – Article 13 of Law 4172/2013

Income tax legislation expressly defines which benefits in kind are treated as employment income. Article 13 includes, inter alia:

• Provision of housing
• Use of a company vehicle for private purposes
• Payment of insurance premiums or tuition fees
• Provision of mobile phones/devices/connections
• Coverage of travel expenses or other benefits not exclusively related to business needs

Each benefit is subject to a specific valuation method. Clarifications have also been issued for cases where the benefit exclusively serves operational needs of the business—thus not constituting taxable income for the employee.

Social Security Concept of “Earnings”

Social security legislation has traditionally adopted an extremely broad interpretation of what constitutes “wages” or “earnings” for the purpose of imposing social security contributions. This interpretation is based on four main pillars:

• Article 25 of Legislative Decree 1846/1951, which since the 1950s has provided that all benefits in cash and in kind—except for limited social benefits—are subject to contributions.
• The IKA Insurance Regulation (Articles 17 and 19), which monetizes both cash and in-kind benefits (housing, food, heating, etc.).
• Established case law of the Council of State (Supreme Administrative Court), which has repeatedly ruled that even voluntary benefits constitute insurable earnings if granted by reason of the employment relationship.
• Article 38(1) of Law 4387/2016, as amended by Law 4670/2020, which provides that employer and employee main pension contributions are calculated on all forms of earnings of salaried employees, except for specifically listed extraordinary social benefits.

The addition of Article 38 is pivotal, as it forms the modern basis for contribution calculations and confirms the extensive concept of “earnings.”

Exemptions – Benefits Not Subject to Contributions

Law 5006/2022 introduced a special regime for certain benefits that:

• Are granted in kind,
• Are connected with operational/productive needs or occupational health and safety,
• Do not constitute taxable income.

This category includes meals provided during working hours and meal vouchers up to €6.00 per working day, provided specific conditions are met.

However, this exemption does not comprehensively cover all benefits listed in Article 13 ITC.

Benefits in Kind under Article 13 ITC and Social Security Contributions

Where a benefit in kind is taxed as income pursuant to Article 13 ITC, it may be argued that it should also be treated as insurable earnings, based on the broad statutory and jurisprudential interpretation of earnings.

However, in cases involving:

•  Benefits linked to operational needs,
• Benefits explicitly exempted (e.g., meals and meal vouchers under conditions),
• Benefits granted purely for the performance of work

Social security liability is not automatically presumed

This distinction applies to all benefits in kind under Article 13 (housing, company vehicles, devices and connections, insurance premiums/tuition, other benefits), not exclusively to housing.

Current Status

It is crucial to underline the following:

1) To date, no official and specific response has been issued by EFKA (Unified Social Security Fund) regarding whether benefits in kind taxed under Article 13 of Law 4172/2013 are automatically subject to social security contributions. No unified circular or directive has been issued covering all categories (housing, company vehicles for private use, devices and connections, insurance premiums/tuition, etc.).

2) Current accounting practice does not generally impose contributions.

For most benefits under Article 13, prevailing accounting practice does not tend toward the imposition of social security contributions, particularly in the absence of explicit administrative guidance from EFKA. This practice is based on:

• A strict interpretation of statutory exemptions (e.g., meal vouchers under conditions),
• Avoidance of inconsistent treatment pending clear official instructions.

3) Need for Written Clarification from EFKA

In cases of doubt or where the benefit entails significant personal benefit for the employee, submitting a written inquiry to the competent EFKA authority is recommended to obtain an official and binding response.

Until a unified administrative position is established, the combined application of tax assessment (Article 13 ITC) and prudent social security practice remains the safest approach.