Tax-free employer benefits also include popular employee vouchers or city vouchers. These not only offer benefits for employees, but also contribute to strengthening the regional economy. The options for employee vouchers as part of a city or regional voucher are examined below and the benefits for both companies and the region are highlighted.

Tax-free employer subsidies: What are they and what benefits do they offer?

Tax-free employer subsidies, also known as monetary benefits or benefits in kind, are benefits to employees who are exempt from payroll tax. These contributions can be made in a variety of forms, from fuel vouchers to Internet packages and travel allowances. The biggest advantage of such benefits lies in optimising the tax and social security burden for both employers and employees.

Compared to traditional salary increases, tax-free employer subsidies provide a better balance between tax relief and net pay. As a result of taxes and social security contributions, a salary increase of 100 EUR means that the employee receives only a fraction of it. In contrast, tax-free subsidies can be used in a targeted manner to improve the financial situation of employees without increasing the tax burden.

Tax-free employer subsidies as part of a city or regional voucher

Employee vouchers as part of a city or regional voucher are a special form of tax-free employer subsidies. These enable companies to offer their employees tax-free discounts on products and services in the region. These vouchers can be used for various purposes:

1. Tax-free allowance for employees

Employers have various options for providing their employees with tax-free benefits in the form of vouchers and gifts. These can be granted as part of the employment relationship and are subject to certain tax regulations. The introduction of monthly employee vouchers worth up to 50 euros, which can be issued as regional vouchers, is particularly interesting. In addition, special events can also be used to present gifts worth up to 60 euros tax-free.

Monthly employee vouchers worth 50 euros

Since January 1, 2022, legal regulations have made it possible to issue monthly employee vouchers worth up to 50 euros. These vouchers can be used as regional vouchers, which can be redeemed exclusively at local retail stores. Such vouchers are not subject to income tax liability provided that they do not exceed the monthly allowance of 50 euros and meet the criteria of the Payment Services Supervision Act (ZAG).

Example: tax-free regional vouchers worth 50 euros per month

A company gives employees vouchers worth 50 euros per month, which they can redeem in local shops and restaurants. Since the vouchers do not exceed the monthly allowance of 50 euros and can only be used to purchase goods and services in the region, they are tax-free.

Tax-free gifts for personal occasions

Gifts on the occasion of personal events can be tax-free if two conditions are met. First, they must be given as a gift for a personal occasion, such as birthdays, weddings, or workers' goodbyes. Gifts that are common in social circles, such as flowers, chocolates, or books, fall into this category.

The second condition is that the objective value of the gift does not exceed 60 euros (including sales tax). An interesting feature of this regulation is that the 60-euro limit can be used multiple times for each individual employee. This enables the employer to distribute gifts on various occasions without having to fear tax deductions.

Example: tax-free gifts for personal occasions

An employer wants to make their employees happy on their birthday and gives each employee a bottle of wine worth 25 euros. Since the value of the gift is below the 60 euro limit and is a usual gift for a personal event, this gift is tax-free.

The opportunities to issue tax-free vouchers and gifts to employees offer companies an attractive opportunity to express their appreciation while taking advantage of tax benefits. However, it is important to familiarise yourself with current regulatory requirements to ensure that these benefits are being used correctly.

2. Food and food: tax-free meal subsidies in detail

When it comes to supporting food costs for your employees, there is some important information to consider. Here are the exact subsidy options in euros for lunch from 2023:

The legal basis for the meal subsidy is set out in Section 8 (2) p. 6 of the Income Tax Act (EStG) and in the valuation of canteen meals and food stamps as a benefit in kind in accordance with R 8.1 paragraph 7 number 4 of the Payroll Tax Guidelines (LStR).

The amount of the meal subsidy is based on the benefits in kind, which are announced annually and are based on consumer prices. From 2023, there is an official benefit in kind of 3.80 euros for lunch or dinner and 2.00 euros for breakfast. In addition, there is the tax-free employer subsidy of 3.10 euros.

This results in the following subsidy option for lunch or dinner:

Year 2023 and beyond: Benefit in kind (3.80 euros) + employer subsidy (3.10 euros) = 6.90 euros

There is the following subsidy option for breakfast:

Year 2023 and beyond: Benefit in kind (2.00 euros) + employer subsidy (3.10 euros) = 5.10 euros

The subsidy options are per day and per meal. As a rule, the employer pays the benefit in kind of 3.80 euros for lunch and taxes this at a flat rate of 25 percent. With 15 subsidies per employee, this results in an amount of up to 51.75 euros per month, which is also taxed at 25 percent.

Alternatively, it is possible for employees to pay the mandatory share themselves, while the employer only grants the tax-free subsidy of 3.10 euros. As a result, employees receive a lower subsidy, but this remains tax-free for the employer.

There is also the option to reduce the employer's tax burden using digital solutions. The actual invoice amount for the meal is taken into account. If employees contribute their own contribution to the meal, the mandatory taxable share can be reduced, which reduces the employer's tax burden.

3. Health-promoting measures: tax-free support in detail

Health-promoting measures for employees can be supported in a variety of ways. Here are the exact funding options in euros from 2023:

The legal basis for tax-free support for health-promoting measures is set out in Section 3 No. 34 of the Income Tax Act (EStG). According to this, employers can grant their employees up to 500 euros a year tax-free for measures to improve their general health. These include, for example, gym memberships, health courses or sports activities.

example:

An employee takes part in a yoga class that costs 300 euros per year. The employer reimburses him in full for these costs. Since the costs are below the 500 euro limit, the subsidy remains tax-free.

4th job ticket: tax-free mobility support in detail

Support with mobility costs for your employees can be provided in the form of job tickets. Here are the exact funding options in euros from 2023:

The legal basis for tax-free job tickets is set out in Section 3 No. 15 of the Income Tax Act (EStG). According to this, employers can grant their employees subsidies for public transport that are tax-free of up to 44 euros per month. These can be monthly passes for buses, trains or similar means of transport.

example:

An employee regularly uses public transport to travel to work. His employer grants him a monthly subsidy of 40 euros for the use of buses and trains. Since this amount is below the limit of 44 euros, the subsidy remains tax-free.

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