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Nexia Ebner Stolz

Tax Advice

Company Benefits: More Net from the Gross

One of the big­gest chal­len­ges cur­rently fa­cing com­pa­nies in Ger­many is the shor­tage of qua­li­fied em­ployees on the la­bor mar­ket. To find and re­tain good em­ployees, em­ploy­ers must as­sem­ble an at­trac­tive over­all pa­ckage that in­clu­des not only ade­quate pay and sui­ta­ble working con­di­ti­ons, but also other in­cen­ti­ves pro­mo­ting loy­alty to the com­pany.

This is where com­pany be­ne­fits come into play that also in­clu­des the pos­si­bi­lity of pro­vi­ding the em­ployee with re­mu­nera­tion using va­rious be­ne­fits un­der pay­roll tax and so­cial se­cu­rity contri­bu­tion law. An in­itial over­view, which can­not be con­clu­sive re­gar­ding the ne­cessary case-by-case ex­ami­na­tion, can be found here.

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Health Pro­mo­tion

Be­ne­fits of­fe­red or sub­si­di­zed by the em­ployer for work­place health pro­mo­tion and be­ha­vioral pre­ven­tion, such as yoga clas­ses or gym­nas­tics du­ring breaks, are ex­empt from tax and so­cial se­cu­rity contri­bu­ti­ons up to an an­nual amount of EUR 600. The be­ne­fits must meet spe­ci­fi­cally de­fi­ned cri­te­ria and be cer­ti­fied. Mo­re­over, they must be gran­ted in ad­di­tion to the salary that is owed any­way.

Note: Be­ne­fits pre­do­mi­nantly in the em­ployer's own in­te­rest, such as pro­tec­tive vac­ci­na­ti­ons or "health-re­la­ted" work equip­ment, do not re­sult in wa­ges.

Tra­vel Al­lo­wan­ces

If the em­ployer sub­si­di­zes the em­ployee's tra­vel by pu­blic trans­port (ex­clu­ding air trans­port) bet­ween home and the first place of work as well as tra­vel by lo­cal pu­blic trans­port (in­clu­ding pri­vate tra­vel), these be­ne­fits are ex­empt from tax and so­cial se­cu­rity contri­bu­ti­ons, pro­vi­ded that the sub­sidy is gran­ted in ad­di­tion to the salary that is owed any­way. The tax ex­emp­tion ap­plies both to sub­si­dies and to the dis­coun­ted or free pro­vi­sion of ti­ckets (e.g. job ti­ckets, rail­cards). Howe­ver, the tax-free be­ne­fit is off­set against the com­mu­ting al­lo­wance.

Note: If the ti­ckets meet the re­qui­re­ments for tax ex­emp­tion, the non-mo­ne­tary re­mu­nera­tion ex­emp­tion li­mit of cur­rently EUR 50 per month does not ap­ply. This me­ans that the non-mo­ne­tary re­mu­nera­tion ex­emp­tion li­mit can be used for other non-mo­ne­tary be­ne­fits to em­ployees.

In­stead of tax ex­emp­tion, the em­ployer could also tax tra­vel al­lo­wan­ces at a flat rate un­der cer­tain con­di­ti­ons.

Com­pany Bi­cy­cles

If the em­ployer pro­vi­des the em­ployee with a com­pany bi­cy­cle for use free of charge or at a re­du­ced price, the re­sul­ting non-cash be­ne­fit for the em­ployee is ex­empt from tax and so­cial se­cu­rity contri­bu­ti­ons, pro­vi­ded the be­ne­fit is gran­ted in ad­di­tion to the salary that is owed any­way. Only bi­cy­cles that are not to be re­gar­ded as mo­tor ve­hi­cles (e.g. pe­del­ecs up to 25 km/h, not S-pe­del­ecs) fall un­der the tax ex­emp­tion.

Note: If the cri­te­rion of ad­di­tio­na­lity is not met and ra­ther a salary con­ver­sion is made, the use of the com­pany bi­cy­cle does not fall un­der the tax ex­emp­tion. In this case, the non-cash be­ne­fit must be de­ter­mi­ned using the 1% rule. In the case of a trans­fer af­ter De­cem­ber 31, 2018, only a quar­ter of the gross list price is to be used as the ba­sis for as­sess­ment since 2020.

If a com­pany bi­cy­cle is trans­fer­red to the em­ployee free of charge or at a re­du­ced price by the em­ployer, the be­ne­fit can be ta­xed at a flat rate by the em­ployer if it is ad­di­tio­nally gran­ted.

Be­ne­fits in Kind

If the em­ployer pro­vi­des the em­ployee be­ne­fits in kind, such as flowers or a book on the oc­ca­sion of a spe­cial per­so­nal event (e.g. wed­ding, an­ni­vers­ary) of up to EUR 60 (gross), this be­ne­fit does not con­sti­tute re­mu­nera­tion for the em­ployee. Drinks and lu­xury foods (fruit, coo­kies) con­su­med at the work­place are also not in­clu­ded in wa­ges. Me­als up to EUR 60 (gross) due to an ex­tra­or­di­nary work as­si­gn­ment also do not count as wa­ges.

Note: Since at­ten­ti­ons do not con­sti­tute wa­ges, so that they are not to be in­clu­ded un­der the non-mo­ne­tary re­mu­nera­tion ex­emp­tion li­mit.

In­ter­net Fees

If the em­ployer pays sub­si­dies towards the em­ployee's costs for In­ter­net use (run­ning costs and costs for set­ting up In­ter­net ac­cess), the em­ployer can pay a flat rate of 25% tax on the re­sul­ting in­come for the em­ployee, as­su­ming that the sub­si­dies are gran­ted in ad­di­tion to the in­come owed any­way. The tax aut­ho­ri­ties con­sider a monthly amount of up to EUR 50 to be eli­gi­ble for lump-sum ta­xa­tion wi­thout fur­ther ex­ami­na­tion.

Note: The as­sump­tion of costs and the lump-sum com­pen­sa­tion for the use of the pri­vate con­nec­tion may be of par­ti­cu­lar in­te­rest to em­ployees working in a home of­fice.

Meal Vou­chers

If the em­ployer grants its em­ployees meal vou­chers and if the sett­le­ment va­lue of the meal vou­cher does not ex­ceed the of­fi­cial non-cash re­mu­nera­tion va­lue by more than EUR 3.10, the meal vou­cher is to be va­lued at the non-cash re­mu­nera­tion va­lue. Thus, up to EUR 3.10 per working day are tax-ex­empt. Fur­ther re­qui­re­ments are that the meal vou­chers are ac­tually used to purchase me­als, that only one meal vou­cher per meal is paid for each day, and that the meal vou­cher is not is­sued to em­ployees for days on which an ex­ter­nal ac­tivity is car­ried out. The ta­xable non-cash be­ne­fit va­lue of EUR 3.57 in 2022 can be ta­xed at a flat rate by the em­ployer, so that as a re­sult meal vou­chers up to a va­lue of EUR 6.67 per working day will be tax- and so­cial se­cu­rity-free for the em­ployee from 2022.

Note: Pro­vi­ded that an em­ployee does not re­ceive more than 15 meal vou­chers per month and does not per­form away-from-home ac­tivi­ties on an an­nual aver­age of more than th­ree working days per month, there is no ob­li­ga­tion to re­cord his or her days of ab­sence. Meal vou­chers may also be gran­ted for home of­fice ac­tivity days, pro­vi­ded em­ployees purchase me­als.

Vou­chers and Cash Cards

If, in ad­di­tion to the salary owed any­way, the em­ployee is gran­ted non-cash be­ne­fits in kind by the em­ployer that fall un­der the monthly be­ne­fit in kind ex­emp­tion li­mit of EUR 50 (EUR 44 un­til 2021), these are ex­empt from tax and so­cial se­cu­rity contri­bu­ti­ons. Vou­chers or cash cards gran­ted by the em­ployer to the em­ployee are re­co­gnized as re­mu­nera­tion in kind in this sense if they en­title the em­ployee ex­clu­si­vely to purchase goods or ser­vices from the vou­cher is­suer from its own pro­duct range (clo­sed-loop cards, e.g. re­loa­da­ble gift cards for the re­tail trade, ci­nema vou­chers) or to purchase goods or ser­vices not only from the vou­cher is­suer but also from a li­mited group of ac­cep­tance points (con­trol­led-loop cards, e.g. cen­ter vou­chers, city cards, So­dexo Be­ne­fit Pass). In or­der for clo­sed-loop and con­trol­led-loop cards to be re­co­gnized as re­mu­nera­tion in kind, they must also (since 01.01.2022) meet the cri­te­ria stan­dar­di­zed in the Pay­ment Ser­vices Su­per­vi­sion Act. If this is the case, the cards can be gran­ted tax-free if the afo­re­men­tio­ned monthly EUR-50-th­res­hold is not ex­cee­ded in­clu­ding fur­ther non-mo­ne­tary re­mu­nera­tion.

Note: In con­trast, so-cal­led open-loop cards (e.g. pre­paid cards with Pay­Pal cre­dit, Visa and Mas­ter­Card) are trea­ted as cash be­ne­fits and thus do not fall un­der the non-cash be­ne­fit ex­emp­tion li­mit.

Char­ging of Elec­tric Ve­hi­cles

If an em­ployee char­ges his or her pri­vate or busi­ness elec­tric or hy­brid elec­tric ve­hi­cle at a char­ging de­vice on the em­ployer's pre­mi­ses, the non-cash be­ne­fit ac­cruing to the em­ployee is ex­empt from tax and so­cial se­cu­rity contri­bu­ti­ons if he or she re­cei­ves this in ad­di­tion to the salary that is owed any­way. The free or re­du­ced-price trans­fer (ren­tal, loan) of a com­pany char­ging de­vice to the em­ployee for pri­vate use is also tax-free. Howe­ver, this does not ap­ply to the elec­tri­city drawn from the com­pany char­ging de­vice, whe­reby it is ir­re­le­vant whe­ther the elec­tri­city con­nec­tion is in the em­ployer's name or whe­ther the em­ployer ma­kes contri­bu­ti­ons to the em­ployee's elec­tri­city costs.

Note: Elec­tric bi­cy­cles over 25 km/h (e.g. S-pe­del­ecs) are also co­vered by the tax ex­emp­tion.

If the com­pany char­ging de­vice is trans­fer­red to the em­ployee free of charge or at a re­du­ced price, lump-sum ta­xa­tion of the re­sul­ting be­ne­fit co­mes into con­side­ra­tion if it was ad­di­tio­nally gran­ted.

Al­lo­wance for Char­ging Elec­tric Ve­hi­cles

If the em­ployer pro­vi­des an em­ployee with an elec­tric or hy­brid elec­tric ve­hi­cle as a com­pany car - also for pri­vate use - the reim­bur­se­ment by the em­ployer of the elec­tri­city costs borne by the em­ployee him­self is to be trea­ted as an ex­pense al­lo­wance ex­empt from tax and so­cial se­cu­rity contri­bu­ti­ons.. To sim­plify the reim­bur­se­ment of ex­pen­ses, monthly lump sums exist for the pe­riod from Ja­nu­ary 1, 2021 to De­cem­ber 31, 2030, which can be reim­bur­sed tax-free. The amount of the flat rate de­pends on whe­ther the em­ployee has an ad­di­tio­nal char­ging fa­ci­lity avail­able at the em­ployer's pre­mi­ses. With an ad­di­tio­nal char­ging op­tion, the flat rate for elec­tric ve­hi­cles is EUR 30 per month and EUR 15 per month for hy­brid elec­tric ve­hi­cles. Wi­thout an ad­di­tio­nal char­ging op­tion, the flat rate for elec­tric ve­hi­cles is EUR 70 and for hy­brid elec­tric ve­hi­cles EUR 35 per month. Al­ter­na­tively, the ac­tual costs pro­ven by re­ce­ipts can also be reim­bur­sed as a tax-free reim­bur­se­ment of ex­pen­ses.

Note: Elec­tri­city char­ging cards are trea­ted in the same way as an ad­di­tio­nal char­ging fa­ci­lity at the em­ployer's pre­mi­ses.

Com­pany IT Equip­ment

If an em­ployer pro­vi­des an em­ployee with data pro­ces­sing and te­lecom­mu­ni­ca­ti­ons equip­ment in­clu­ding ac­cess­ories (e.g. lap­top, smart­phone), the non-cash be­ne­fit ari­sing from the pri­vate use is tax- and so­cial se­cu­rity-free.. The same also ap­plies to the pri­vate use of com­pany sys­tem and ap­pli­ca­tion pro­grams (e.g. Mi­cro­soft Of­fice pa­cka­ges) as well as ser­vices pro­vi­ded in con­nec­tion with the afo­re­men­tio­ned be­ne­fits (main­ten­ance, in­stal­la­tion, sup­port).

Note: The tax ex­emp­tion also ap­plies if the pri­vate use pre­do­mi­na­tes (e.g. pro­vi­sion of an App­le­watch or an iPad). The de­cisive fac­tor is that the de­vices are ow­ned by the com­pany. Fur­ther­more, the tax ex­emp­tion can also be used if the be­ne­fit is not gran­ted in ad­di­tion to the salary that is owed any­way.

Fur­ther­more, a flat-rate tax of 25% is per­mit­ted if the em­ployer trans­fers data pro­ces­sing equip­ment to its em­ployees free of charge or at a re­du­ced price in ad­di­tion to the wa­ges owed any­way.

Child­care Costs

If an em­ployer reim­bur­ses an em­ployee for ex­tra­or­di­nary care ser­vices for re­la­ti­ves in need of care or child­ren up to the age of 14 due to the Corona pan­de­mic, these are ex­empt from tax and so­cial se­cu­rity contri­bu­ti­ons up to an amount of EUR 600. The pre­re­qui­site is that due to the pan­de­mic and its as­so­cia­ted clo­sures the em­ployee is working out­side nor­mal working hours or re­gu­lar care is not pos­si­ble. It is also ne­cessary that the pay­ment is ad­di­tio­nal to the wa­ges owed any­way.

Note: The al­lo­wance only ap­plies to short-term care. Ac­cor­ding to the tax aut­ho­ri­ties, short-term care ends as soon as the re­spec­tive care fa­ci­li­ties can re­sume their re­gu­lar ope­ra­ti­ons.

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