With the help of employee benefits, companies can provide their employees with additional tax-free benefits. Non-cash benefits of up to 50 euros gross per employee:in are possible per month. We provide you with all the information you need about benefits in kind.
- Tax-free non-cash benefits of up to 50 euros gross per month or 600 euros per year are available to employees.
- Full-time and part-time employees as well as mini-jobbers and trainees can receive benefits in kind.
- Up to 50 euros per month in non-cash benefits are exempt from social security and tax.
- Non-cash benefits can be used in a variety of ways, e.g. for sports studios, materials for professional development or language courses.
- The tax exemption only applies to benefits in kind.
What are non-cash benefits?
Non-cash benefits are material income that employees do not receive in the form of money. Non-cash benefits are also called employee benefits. These fringe benefits are services or products that employers give to their employees.
In principle, Non-cash benefits also fall under income for tax purposes, they are treated like money. Accordingly, the law assumes a "pecuniary advantage" for corresponding goods and tax liability applies. Employees must pay wage tax and social security contributions on a pro rata basis on the equivalent value of a benefit in kind.
However, the legislator has set an exemption limit for benefits in kind. Up to a sum of 50 euros gross per month, benefits in kind are not counted as wages. They are called tax-free non-cash benefits. There are also tax-privileged benefits in kind.
Legal requirements for non-cash benefits 2022
The 50-euro Non-cash benefits have been in force in Germany since January 2022. This is the exemption limit for tax-free non-cash benefits. Previously, the exemption limit for contributions in kind was 44 euros.
With the new regulation of Non-cash benefits by the Federal Ministry of Finance, the handling of voucher cards and Non-cash benefits cards was also defined more precisely. Accordingly, vouchers are now only considered noncash benefits if goods or services are used with them and the vouchers are limited to a so-called "limited network", i.e. a certain chain of stores or a limited area of application as well as a limited range of products, e.g. as a petrol voucher or a voucher for a fitness studio. The new regulation increases the tax-free Non-cash benefits per year per employee:in to up to 600 euros.
Non-cash gifts are tax-free up to 60 euros
For birthdays, weddings or other occasions, companies can give their employees gifts in kind up to a value of 60 euros tax-free.
Tax-free or tax-reduced non-cash benefits for employees
Non-cash benefits can be realised in different ways:
- Recreation allowance: With the allowance for recreation costs, companies can reimburse their employees up to 600 euros of the costs for rehabilitation leave or cures tax-free. If the recuperation allowance is above the exemption limit, it must be taxed at a flat rate of 25 per cent.
- Workplace health promotion: Up to 600 euros can be used tax-free for measures of workplace health promotion for employees. This includes, for example, yoga courses, back training or the purchase of ergonomic seating furniture.
- Electronics: Company mobile phones or computers can be subsidised tax-free up to 600 euros per year through Non-cash benefits.
- Communication: Non-cash benefits can be used for the use of the internet or as a subsidy for telephone charges. Employees must then pay a flat-rate tax of 25 per cent on these as a non-cash benefit.
- Travel allowance: Job tickets or mobility allowances are considered non-cash benefits. Employers must pay attention to the different taxation regulations.
- Kindergarten allowance: Employers can contribute to the costs of kindergarten. Non-cash benefits for the care of children who are not of school age are tax-free.
- Team events: Companies can organise up to two events worth up to 110 euros per employee tax-free. These include team-building measures as well as team events, company celebrations or the annual Christmas party.
Companies must observe the following with regard to non-cash benefits
- Non-cash benefits are applicable to all employees in the company.
- The benefit may not be in the form of cash.
- Non-cash benefits are in addition to the salary and are not part of it. Accordingly, the non-cash benefits cannot be realised in the form of deferred compensation as in the case of occupational pension schemes.
- If the exemption limit of 50 euros per month is exceeded, the entire noncash benefit is taxed and no social security contributions are due.
- Companies must be able to prove when the non-cash benefits were paid.
Tax law basis for Non-cash benefits:
- Non-cash benefits and wage tax: § 8 para. 1 EStG
- Allowance for Non-cash benefits: § 8 para. 2 sentence 11 EStG and R 8.1 para. 3 LStR
- Difference between cash benefit and non-cash benefits: BMF letter dated 15 March 2022
The administration and accounting of Non-cash benefits can be very time-consuming. With Circula's app, companies rely on a simple and cost-saving tool to provide employee benefits. At the same time, the app ensures that monthly tax-free limits are not exceeded when using Non-cash benefits.