Bonus against Inflation – Tax exemption for so called “Teuerungsprämie”

Bonus against Inflation – Tax exemption for so called “Teuerungsprämie”

The Parliament recently passed a new tax bill which introduced another incentive for employers to grant a bonus payment (“Teuerungsprämie”) to employees for support against inflation. The new bonus payment is tax free as well as exempt from social security contributions and wage related taxes for up to EUR 3.000. However, the tax exemption cannot be applied to existing bonuses, but rather requires an additional bonus.

When implemented, a focus should be put on how the new Teuerungsprämie is combined with other recently introduced tax exemptions, such as the new “Mitarbeitergewinnbeteiligung”, as the EUR 3.000 threshold applies to both bonus tax benefits combined. Also a retroactive switch of an existing “Mitarbeitergewinnbeteiligung” into a “Teuerungsprämie” might be beneficial, whereas this should be carefully analyzed on a case-ny-case-basis. Please contact your Deloitte tax advisor for further questions.