Tax-free inflation adjustment

The federal government's 3rd relief package

As part of the 3rd relief package, the federal government has drawn up a draft law with which employer contributions of up to €3,000.00 can be paid out tax- and social security-free in the future. Such are payments made by employers to employees, which are intended to counteract the effects of the current energy crisis and inflation. These special payments are usually negotiated between employers' associations and trade unions in collective bargaining rounds or paid individually by individual employers. "The federal government is prepared to exempt an amount of up to EUR 3,000 from tax and social security contributions in the event of additional payments from companies to their employees," says the resolution paper. The federal cabinet passed the draft law on to the Bundestag on September 28, 2022. The topic is now being discussed there and will become legally binding after the approval of the Bundestag. It is not yet clear when this will be the case.

The resolution is to apply retrospectively from October 1, 2022 to December 31, 2024. The period in which these subsidies can be paid is therefore limited. One of the reasons for this is that employers pay for the inflation bonuses themselves. If there is no contractual obligation for the employer, the subsidies are paid voluntarily. The long period of time of this resolution ensures that employers can also pay the amounts in several installments, as long as the total does not exceed €3,000.00. Two privileged end-of-year or special payments are therefore conceivable.

However, it remains to be seen whether the desired relieving effect will be achieved. After all, many companies are also suffering from the effects of the current economic strain. It is still unclear whether and to what extent this option will be used across the board.

In order to claim the privileged effect, it is sufficient for the employer to make it clear when granting the benefit that this is related to rising energy prices, for example by making a note on the transfer slip with the pay slip. This "low-bureaucracy regulation" is intended to simplify payment of the premium.