IRS exempt prizes up to a 6% limit but there are rules to meet

The awarding of prizes by companies to workers also changed. This year was introduced an IRS exemption up to a 6% limit of the worker’s annual base remuneration for these payments, provided they are attributed voluntarily and without regular character by the employer.

But let’s go to numbers. For a scenario of an annual base remuneration of 24 thousand euros (two thousand euros per month), whose productivity award is 1,500 euros, the exemption limit corresponds to 6% of the annual base remuneration: 1,440 euros, ie only 60 euros are subject to normal rates applicable to the IRS echelon.

For those who have an annual base remuneration of 36 thousand euros and who receive a 2,500 euros award, only 2,160 euros will be exempt from IRS, while the remaining 340 euros will be taxed at normal rates applicable to the IRS level.

In fact, CIP even presented the proposal to apply a 15th month free of discounts, since it was understood as a prize for the worker. Admittedly, this formula is not being applied as suggested and the basis of certified accountants nods with various changes to the legislation. «In 2024 and 2025 so many rules were created around the law that it is a huge risk any company to be able to enjoy and companies end up having a lack of confidence in its application. CIP’s proposal exists, but with other requirements, the ideal was that there was clean so that it was possible to offer this salary with IRS and social security exemption without major conditions, ”says Paula Franco to the sunrise.

It is recalled that for companies to be able to assign this award and benefit from these conditions will have to increase the worker’s base salary by 4.7% and to ensure an increase in all the company’s salaries that are below average by 4.7%.