Sign in to follow this  
Followers 0

Ask your boss for 3,000 euros tax free馃槀

19 posts in this topic

https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Schlaglichter/Entlastungen/inflationsausgleichsgesetz.html

This has now come into force! From now, you can ask your boss for a " voluntary " payment up to 3,000 euros either as a one-off or staggered till 31st December 2024 as a way of helping you with the current cost of living crisis.

The payments are tax free and you don't need to declare them to the Finanzamt.

It doesn't matter if you work full time or part time ( eg on a Minijob basis ).

The basis for this law is quite a mouthful: Gesetz zur temporaeren Senkung des Umsatzsteuersatzes auf Gaslieferungen ueber das Erdgasnetz."

It is NOT compulsory for the employer to pay ( nor is it a tax deductible expense for the employer 馃槱).

So you can only ask!

I am a professional independent insurance broker and authorised advertiser. Contact me.
3

Share this post


Link to post
Share on other sites
31 minutes ago, john g. said:

nor is it a tax deductible expense for the employer 馃槱).

Of course it is a business expense for the employer, just like all other salary.

2

Share this post


Link to post
Share on other sites

https://www1.wdr.de/nachrichten/inflationspraemie-steuerfrei-fuer-beschaeftigte-100.html

Thanks, Panda! There is a bit in here which confused me!聽

( die Unternehmen...bekommen das Geld vom Finanzamt nicht erstattet)..

By the way, Panda , it also says Selbststaendige will also benefit. How?馃榾 Should I ask my clients for 3,000 euros?馃槃. That sounds like a good plan!!

I am a professional independent insurance broker and authorised advertiser. Contact me.
1

Share this post


Link to post
Share on other sites
1 hour ago, john g. said:

By the way, Panda , it also says Selbststaendige will also benefit.聽

It doesn't say that.

0

Share this post


Link to post
Share on other sites

2 hours ago, john g. said:

It says that in my first link to the Bundesfinanzministerium.

https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Schlaglichter/Entlastungen/inflationsausgleichsgesetz.html

" Davon profitieren..."

I am a professional independent insurance broker and authorised advertiser. Contact me.

You didn't read that article, did you?聽;)

It isn't about the 3,000鈧 that only employees can get.

It is about raising the tax-free allowance starting with 2023, by a measly 285鈧.

Through this measure, everybody聽who has income (including you as a self-employed) will "profit" to the tune of:

  • 285鈧 * your_personal_income_tax_rate聽

The most someone could "profit" from this would be:

  • 285鈧 * 42% = 119.70鈧

Then they say that they will also flatten the tax curve in 2023 by a bit.

In total, they assume that聽through the sum of these tax relief measures, the average person will save 192鈧 in tax聽per year.

Assuming every man, woman and child in Germany "profits" by 192鈧 per year (which is not the case, children, for example, don't have income), this would mean that the state would lose in tax in 2023 (not in 2022, since these improvements will only start in 2023):

  • 192鈧 * 83.13 million inhabitants = 15.96 billion 鈧

Now please look at how much the state took in during the first half of 2022 in additional VAT, just because prices were raised by inflation, those were 29 billion 鈧:聽https://www-morgenpost-de.translate.goog/wirtschaft/article236050753/linke-inflation-mehrwertsteuer-umsatzsteuer-mehreinnahmen-rueckzahlung.html?_x_tr_sl=de&_x_tr_tl=en&_x_tr_hl=en-US&_x_tr_pto=wapp

And inflation wasn't even that high during the first two months of 2022:聽

DWO-FI-Inflationsrate-DE-sk-1.jpg.fbac31

But ok, let's assume that the state will only take in 58 billion 鈧 of extra VAT because of the inflated prices in 2022.

So let's sum this up:

In 2022, the state will take in an extra 58 billion聽just in VAT and all they offer in return are 300鈧 Energiepreispauschale, again assuming 83.13 recipients (which there aren't, but let's keep this simple), the state will spend 24.94 billion 鈧 on relief (which it won't, since these 300鈧 are taxable income, i.e. worst case a person will only be left with [100% - 42%]*300鈧 = 174鈧. The state will get back some of these 300鈧 through income tax).

And employers are supposed to somehow find an extra 3,000鈧 Inflationsausgleichspr盲mie per employee, additional to the normal salaries they pay them, to offer their employees some much-needed relief from the cost of inflation (which is of course much higher than the (100% - personal_income_tax_rate)*300鈧 per year the state gave left them with).

And in 2023, assuming that the rate of inflation does not rise any further, that will be another extra 58 billion the state will take in聽just in VAT, only because the prices of goods rose because of inflation.

In turn, they will at most offer spend 15.96 billion 鈧 in tax relief.

I am not impressed.

6

Share this post


Link to post
Share on other sites

It's a very short link! I read the article! I don't see your extravagant tax link!聽:D

By the way, what are you not impressed with?馃榾

I am a professional independent insurance broker and authorised advertiser. Contact me.
1

Share this post


Link to post
Share on other sites
6 minutes ago, john g. said:

It's a very short link! I read the article! I don't see your extravagant tax link!聽:D

Scroll down and you will see it:

SmartSelect_20221028-214541_Chrome-min.j

8 minutes ago, john g. said:

By the way, what are you not impressed with?

The state's measures to help its citizens cope with inflation (after all, Inflationsausgleichsgesetz means "inflation compensation law").

2

Share this post


Link to post
Share on other sites
On 28/10/2022, 21:20:12, PandaMunich said:

So let's sum this up:

In 2022, the state will take in an extra 58 billion聽just in VAT and all they offer in return are 300鈧 Energiepreispauschale, again assuming 83.13 recipients (which there aren't, but let's keep this simple), the state will spend 24.94 billion 鈧 on relief (which it won't, since these 300鈧 are taxable income, i.e. worst case a person will only be left with [100% - 42%]*300鈧 = 174鈧. The state will get back some of these 300鈧 through income tax).

And employers are supposed to somehow find an extra 3,000鈧 Inflationsausgleichspr盲mie per employee, additional to the normal salaries they pay them, to offer their employees some much-needed relief from the cost of inflation (which is of course much higher than the (100% - personal_income_tax_rate)*300鈧 per year the state gave left them with).

Panda,

I am surprised this 300 Euros Energiepreispauschale was taxable, but then again not much surprises me anymore. Give with one hand and take away with the other. Give cash instead of a credit at the energy company, so people can spend it on whatever they like and not have a heating credit....

However, the 3000 Euros bonus the employer can pay until 2024, is free of income tax and social tax liability. As income tax, church tax, social taxes etc. consume half of what an employer could pay in as a salary rise, this does not seem a bad bonus on part of employee. Assuming 14 months, that's 214 Euros extra. Assuming a bonus at the end of each quarter, that's 5 x 600 Euros bonus. If the employer decides on much less, so be it, but at least it's an option for them. I do wonder, however, how many will simply pay zero.

1

Share this post


Link to post
Share on other sites

They should just accelerate climate change measures, especially the ones which don't require much manpower.

Invest in the future, don't feed further inflation.

2

Share this post


Link to post
Share on other sites
19 hours ago, MikeMelga said:

They should just accelerate climate change measures, especially the ones which don't require much manpower.

Invest in the future, don't feed further inflation.

Lindner likes his Porsche.

0

Share this post


Link to post
Share on other sites
On 31/10/2022, 13:48:29, MikeMelga said:

They should just accelerate climate change measures, especially the ones which don't require much manpower.

Invest in the future, don't feed further inflation.

Mike, which ones do not involve manpower? I see obvious actions like mandate solar panels. Requires installers. Sure you can build out this, but it takes time. I see no reason not to do this, just a need to understand it takes time to train people coming into such an industry.

Other options? Install wind turbines, especially offshore. This is the UK option. The UK has 4 of the top 10 largest offshore wind installations in the north sea. There seems a lack of political will to get this installation under way and a lack of political will to upgrade the electricity trunk cabling to accommodate the flow of electricity from where it's generated to where it's consumed. Russia pays transport countries a tax. Perhaps giving such transport fees to the communities hosting the cabling would help here. I really struggle to see what the issue is with making the existing cabling larger, or building parallel routes elsewhere.

Other initiatives like give people a bahn card 100, i.e. make public transport free or near free are met blocked by the financial tax office in terms of charges to businesses wanting to do this. Let's say I, as an employer, I want to give employees the lowest level of聽bahncard. Bahncard 25 business is currently 50 Euros (special offer this month - https://www.bahn.de/bahnbusiness/tickets-und-angebote/businesscards/bahncard-business25) and allows first or second class travel for business and personal usage. Employer has to 'justify' the savings made save the 50 f******* euros. Honestly it's not worth the admin costs to do the justification, so what should be a 'free' perk to employees turns into a taxable charge for the employer! I really do wonder sometimes if the German state sets out to stab itself in the foot.

What non manpower climate measures did you have in mind? I am curious.

0

Share this post


Link to post
Share on other sites
7 hours ago, mtbiking said:


he can get a Porsche Taycan..

So what are 'buddies' for?聽B)

0

Share this post


Link to post
Share on other sites

6 hours ago, scook17 said:

What non manpower climate measures did you have in mind? I am curious.

Was thinking something like the bahn card you mention. A few more:

  • Further subsidies for personal and company installation of solar panels, EVs, etc
  • Subsidies for charging stations, battery farms, etc. The battery farms don't require much manpower, for example. IMO the best option to quickly reduce energy production
0

Share this post


Link to post
Share on other sites
On 10/28/2022, 5:19:56, john g. said:

https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Schlaglichter/Entlastungen/inflationsausgleichsgesetz.html

This has now come into force! From now, you can ask your boss for a " voluntary " payment up to 3,000 euros either as a one-off or staggered till 31st December 2024 as a way of helping you with the current cost of living crisis.

Seems many companies are already signing up to this

https://www.businessinsider.de/wirtschaft/finanzen/bis-zu-3000-euro-koennt-ihr-vom-arbeitgeber-als-inflationsausgleich-erhalten-diese-19-unternehmen-zahlen-bereits-j/

1

Share this post


Link to post
Share on other sites
On 10/28/2022, 9:20:12, PandaMunich said:

You didn't read that article, did you?聽;)

It isn't about the 3,000鈧 that only employees can get.

It is about raising the tax-free allowance starting with 2023, by a measly 285鈧.

Through this measure, everybody聽who has income (including you as a self-employed) will "profit" to the tune of:

  • 285鈧 * your_personal_income_tax_rate聽

The most someone could "profit" from this would be:

  • 285鈧 * 42% = 119.70鈧

Then they say that they will also flatten the tax curve in 2023 by a bit.

In total, they assume that聽through the sum of these tax relief measures, the average person will save 192鈧 in tax聽per year.

...

I am not impressed.

Just as a matter of interest, was the up to 3000 Euro bonus payment subject to progression?

In other words, although it was not taxable for income tax or social taxes, does it mean up to 3000 Euros was (effectively) deducted from the personal allowance?

If a company paid the max of 3K, how much in reality did the company and the employee really save?

3K x 30% (an average rate) Income tax = 900 Euros Income tax. If clawed back through progression, actually this is a cost to the employee!

3K Deduction to the company x聽 15% Corporation tax = 450 Euros tax saved.

So net tax income of +450 Euros to the government.

Even at minimum salary (1584 Euros/month), 19K a year, ~11K聽of this is free of income tax. Raising the income tax threshold, as you point out, would have done much more to help low income people, pensioners etc. But then it would not have been companies paying the bill. Am I the only cynic here?聽:D

0

Share this post


Link to post
Share on other sites
4 hours ago, scook17 said:

Just as a matter of interest, was the up to 3000 Euro bonus payment subject to progression?

Each employer can pay each聽employee聽in total 3,000鈧 until 31.12.2024:

  1. free of income tax (and no Progressionsvorbehalt)
    and
  2. free of social security contributions

So if you change jobs, you can get these 3,000鈧 tax-free a second time, or if you have聽two employers in parallel, e.g. a normal job and a mini job, each of these employers can pay you these 3,000鈧 tax-free.

Source:聽https://www.bundesfinanzministerium.de/Content/DE/FAQ/2022-12-07-FAQ-Inflationsausgleichspraemie.html

  • 8. can the tax-exempt maximum amount of 3,000 euros be exhausted separately for each employment relationship or is it necessary to check whether a payment has already been made from other employment relationships?

    The tax exemption within the meaning of 搂 3 number 11c of the Income Tax Act can generally be claimed separately up to the amount of 3,000 euros for each employment relationship, i.e. also for successive or coexisting employment relationships. This also applies in the case of several employment relationships with different employers of affiliated companies within the meaning of section 15 of the Companies Act. The employer therefore does not need to check whether the employee has already received a bonus from another employment relationship with another employer.

  • 20. Is the tax-free IAP (= Inflationsausgelichspr盲mie)聽subject to the progression clause?

    No. The tax-free IAP is not subject to the progression proviso, as it is not mentioned in 搂 32b paragraph 1 sentence 1 of the Income Tax Act.

  • 21. Is the tax-exempt IAP to be shown by the employer in the聽wage tax certificate (= Lohnsteuerbescheinigung) or does it need to be declared by the employee in the income tax return?

    No. The tax-exempt IAP is neither to be shown by the employer in the wage tax certificate (= Lohnsteuerbescheinigung) nor to be stated by the employee in the income tax return.

  • 23. Is the tax-free IAP also exempt from social security contributions?

    Yes. Due to the tax exemption, no social security contributions are due for this benefit, as according to 搂 1 paragraph 1 sentence 1 number 1 of the Social Security Remuneration Ordinance, it is not remuneration for work within the meaning of 搂 14 of the Fourth Book of the Social Security Code.

2

Share this post


Link to post
Share on other sites
4 hours ago, PandaMunich said:

Each employer can pay each聽employee聽in total 3,000鈧 until 31.12.2024:

  1. free of income tax (and no Progressionsvorbehalt)
    and
  2. free of social security contributions

So if you change jobs, you can get these 3,000鈧 tax-free a second time, or if you have聽two employers in parallel, e.g. a normal job and a mini job, each of these employers can pay you these 3,000鈧 tax-free.

Source:聽https://www.bundesfinanzministerium.de/Content/DE/FAQ/2022-12-07-FAQ-Inflationsausgleichspraemie.html

  • 8. can the tax-exempt maximum amount of 3,000 euros be exhausted separately for each employment relationship or is it necessary to check whether a payment has already been made from other employment relationships?

    The tax exemption within the meaning of 搂 3 number 11c of the Income Tax Act can generally be claimed separately up to the amount of 3,000 euros for each employment relationship, i.e. also for successive or coexisting employment relationships. This also applies in the case of several employment relationships with different employers of affiliated companies within the meaning of section 15 of the Companies Act. The employer therefore does not need to check whether the employee has already received a bonus from another employment relationship with another employer.

  • 20. Is the tax-free IAP (= Inflationsausgelichspr盲mie)聽subject to the progression clause?

    No. The tax-free IAP is not subject to the progression proviso, as it is not mentioned in 搂 32b paragraph 1 sentence 1 of the Income Tax Act.

  • 21. Is the tax-exempt IAP to be shown by the employer in the聽wage tax certificate (= Lohnsteuerbescheinigung) or does it need to be declared by the employee in the income tax return?

    No. The tax-exempt IAP is neither to be shown by the employer in the wage tax certificate (= Lohnsteuerbescheinigung) nor to be stated by the employee in the income tax return.

  • 23. Is the tax-free IAP also exempt from social security contributions?

    Yes. Due to the tax exemption, no social security contributions are due for this benefit, as according to 搂 1 paragraph 1 sentence 1 number 1 of the Social Security Remuneration Ordinance, it is not remuneration for work within the meaning of 搂 14 of the Fourth Book of the Social Security Code.

Very infitmative, as usual鉂わ笍鉂わ笍馃憤馃憤

I paid the 3,000 and was advised to mention both the normal employee salary and thr Inflationspraemie on the bank transfer separately that month. So I did.

I am a professional independent insurance broker and authorised advertiser. Contact me.
0

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now
Sign in to follow this  
Followers 0