Tax-free payroll components offer significant benefits for both employers and employees. Here are some key aspects to consider:
Travel Expense Reimbursement
- Mileage Allowance: Employers can reimburse travel costs tax-free according to the Federal Travel Expenses Act:
- Cars: €0.30 per kilometer for the first 20 kilometers, €0.38 for each additional kilometer (2022-2026), up to €4,500 annually.
- Other motor vehicles: €0.20 per kilometer.
Sunday, Holiday, and Night Work Bonuses
- Night Work: 25% of base salary (40% if work begins before midnight).
- Sunday Work: 50% of base salary.
- Holiday Work: 125% for work on December 31 (after 2 PM) and legal holidays; 150% for work on December 24 (after 2 PM), December 25-26, and May 1.
Gift Vouchers and Benefits in Kind
- Monthly Allowance: Up to €50 per month tax-free for non-cash benefits.
- Conditions: Vouchers or cards must be for specific goods or services within a limited regional area and cannot have cash withdrawal functionality.
Job Tickets
- Tax-Free Options: Employers can offer tax-free job tickets, with options to apply a flat tax rate of 15% (affecting the distance allowance) or 25% (without affecting the distance allowance).
Attentions
- Personal Gifts: Up to €60 per occasion tax-free for personal gifts like books, flowers, or CDs.
- Workplace Snacks: Tax-free if the value doesn’t exceed €60.
Childcare and Family Support
- Consultation Services: Tax-free for advice and mediation of childcare or elderly care.
- Short-Term Childcare: Up to €600 annually tax-free for children under 14 or disabled children under 25, if necessary for work reasons.
- Childcare Subsidies: Tax-free subsidies for preschool children’s care in kindergartens or similar institutions.
Company Events
- Allowance: Up to €110 per employee per event, for up to two events annually.
- Inclusions: Covers all related expenses, such as Christmas parties or company outings.
Work Attire
- Typical Work Clothing: Tax-deductible includes items like overalls, uniforms, and medical scrubs.
- Exclusions: Business attire like suits or dresses is not deductible.
Professional Development
- Training Costs: Tax-free if the employer arranges and pays for job-related training that benefits the company.
- Covered Expenses: Include course fees, exam fees, materials, travel expenses, and accommodation.
Employee Discounts
- Annual Allowance: Up to €1,080 in discounts for goods or services offered by the employer.
- Calculation: Based on the reduced retail price, with a 4% reduction on the final price.
Relocation Costs
- Job-Related Moves: Tax-free reimbursement for moves essential for job performance, subject to Federal Relocation Expenses Act limits.
Emergency Assistance
- Support Payments: Up to €600 annually tax-free for employees in emergencies, such as illness.
Workplace Health Promotion
- Annual Allowance: Up to €600 per employee for health promotion measures, such as nutrition courses or back exercises.
Recreation Allowances
- Tax Rate: 25% flat tax for allowances up to €156 for employees, €104 for spouses, and €52 for children, provided for recreational purposes.
Our Recommendation
Effective management of tax-free payroll components enhances employee satisfaction and helps maintain compliance. Employers should stay informed about the latest tax regulations to maximize benefits and reduce risks. For personalized advice and optimization strategies, feel free to contact us at info@payrollgermany.de.