Since January 01, 2022, the limit for tax-free benefits in kind has been raised from 44 EUR to 50 EUR per month.
The 30% flat-rate tax is not applied if the employer provides non-cash benefits to employees that do not qualify as non-cash benefits subject to payroll tax. Likewise, benefits in kind taxed at a flat rate in accordance with Section 40 of the German Income Tax Act (EstG) and company benefits in kind are not taken into account when reviewing the EUR 50 exemption limit.
Which non-cash benefits within the 50 EUR exemption limit are favored? Some possibilities:
Tax-free benefits in kind – what are the possibilities?
Below are some possibilities of what benefits in kind are favored under the 50-EUR exemption limit for the employee:
- Gifts in kind from the employer to the employee (e.g. a book).
- Discounts to the employee granted by a third party within the scope of the employment relationship.
- Vouchers or voucher cards subject to the requirements of Section 2 (1) No. 10 of the Payment Services Supervision Act (Zahlungsdiensteaufsichtsgesetz – ZAG). Only certain goods or services may be purchased with a voucher (limited range of goods and services). Cash payment of the credit must be excluded.
- Insurance premiums for health or voluntary accident insurance.
When is a cash benefit subject to wage tax?
- A cash benefit subject to wage tax exists if the employer makes a payment to the employee and this payment is linked to the agreement to use it to purchase certain goods or services.
- This also applies if the employer subsequently reimburses the employee for the purchase of goods or services previously acquired for private purposes.
- If the total value exceeds the 50-EUR exemption limit per month, the benefits in kind are subject to payroll tax deduction in full.