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New Year’s resolutions and wellness allowance

As the year draws to a close, many of us reflect on the past twelve months and think about how to set goals for the coming year. While some of us may think of our goals in terms of career, financial, or family plans, it’s important to remember the importance of taking care of our physical, mental, and emotional health. Setting New Year’s resolutions related to wellness can have a profound positive impact on our well-being, which can ultimately lead to greater success in other aspects of our lives.

1. How does wellness allowance work?

A common New Year’s resolution is to take better care of one’s health, and there is never as much pressure on new memberships in gyms and training facilities as at the beginning of January. That may be one of the reasons why many employers offer wellness allowances as part of their wellness benefits. This grant allows you to set aside a certain amount of money from your employer to cover wellness expenses. Expenses for exercise related wellness activities can be compensated for within some limits for all companies except sole trader businesses and for partners in “Handelsbolag” (Can be compensated for hired personnel). Rehab and preventive wellness treatments can be compensated in all businesses within some limits. It has to be the same wellness policy for all the employees of the company. In the rules there is a difference treatment of wellness allowance (The company compensates employees for their wellness expenses) and perquisite (Wellness activities directly arranged or paid by the employer). There is no tax free wellness allowance for equipment, such as shoes or tennis rackets. 

2. What is the difference between wellness-allowance and perquisite?

Wellness allowance is a compensation that employers give to employees for costs that the employee has already incurred. A perquisite for wellness activities are activities that the employer directly decides on and pays for. There, the employee him or herself cannot decide how the money for wellness is to be spent. Unlike the rules wellness allowances, there is no fixed amount limit for what is considered to be of lesser value, and therefore tax-free. Since the cost of wellness activities varies depending on where you live and it is difficult to establish a market value for activities, there is no fixed amount limit for perquisite for wellness. So, a judgment as to whether the value of the perquisite can be considered to be of lesser value and of a simpler kind must be made on a case-by-case basis.

3. Frequently asked questions

  • How much wellness allowance can you pay tax-free compensation for? You may pay tax-free compensation for wellness allowance for a maximum of SEK 5,000 per year and employee. If you pay SEK 5,001, the entire amount is taxable. As a basis for this, the employee must provide a receipt or invoice for the cost for which compensation is sought. The cost for the employee may be more than SEK 5,000, but it is only SEK 5,000 that the employer can compensate for the compensation to be tax-free.
  • What is the difference between wellness allowance and perquisite? Again, wellness allowance is a compensation that the employer gives to employees for costs that the employee has already incurred. A perquisite for wellness activities are activities that the employer directly decides about and pays for. In this case, the employee cannot decide for himself or herself how the money for wellness is to be spent. In contrast to the rules for wellness allowances, there is no fixed amount limit for what is considered to be of lesser value, and therefore tax-free. Since the cost of wellness activities varies depending on where you live and it is difficult to determine a market value for the activities, there is no fixed amount limit for perquisite wellness activities. So, a judgment as to whether the perquisite can be considered to be of lesser value and of a simpler kind must be made on a case-by-case basis.
  • What should I, as a small business owner, think about wellness allowance? All wellness should be handled as a perquisite and not as a wellness allowance, so you avoid the amount limit of SEK 5,000. Thus, invoices and receipts for the wellness activities should be issued to your company and not to yourself, and they should be paid directly from the company account and not by you personally.

In conclusion, making New Year’s resolutions related to exercise and health will help you achieve your goals both related to this, but can also contribute to your business in general. Even if the motivation from New Year’s Eve doesn’t last all year, you can still benefit from the rekindling of spirit it can bring. By taking advantage of the wellness allowance benefits, you can reduce your costs for this, and in the best case, increase your chances of successfully making progress towards achieving a healthier and happier life.

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