Tax- and social security-free premiums for employees decided
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Tax- and social security-free premiums for employees decided

In the Corona Crisis there are many people who are working daily to keep our lives going even in times of crisis. In order to reward the work commitment of these people, the federal government has decided on tax- and social security-free premiums for employees. We have summarised the framework conditions for you.

These are employees who work in systemically important professions that are not possible from the home office. Tax- and social security-free premiums for employees have been decided on in order to do more than friendly words at the counter and applause, said Federal Finance Minister Scholz in a statement by the Federal Ministry of Finance.

Who can receive the tax-free premiums?

The idea of the Confederation is to reward in particular those employees who work in systemically important occupations during the crisis.

But: A separation by profession is not legally possible. Therefore, in principle, all employees can benefit from the new regulation and employers can reward employees who have provided special services during the crisis in all sectors.

Conditions for tax-free premiums

Employers must pay the premiums in addition to the wage/salary of the respective employees, which is due anyway. In this way, the Federal Government ensures that payments actually reach the employees as additional income and that employers do not simply secure tax relief.

The employee must also record the benefits in the payroll account.

Other tax exemptions and valuation allowances remain unaffected by the payments.

Tax-free premiums are not subject to social security contributions

The additional payments also remain free of contributions in the social securty contribtions.

In this way, the Ministry of Finance underlines the character of the bonus payments as recognition for indispensable services to society in the Corona crisis.

Period during which tax-free premiums can be paid

Employees may pay the bonus in cash or in kind between 1 March and 31 December 2020. All bonuses paid by employers during this period are considered tax and social security free.

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