When organising employee remuneration, companies are increasingly relying on benefits in kind, as they offer attractive and tax-advantageous opportunities for employee benefits. In order to make the most of the tax advantages of benefits in kind, a call to the tax office can provide additional tax certainty in individual cases.
In this blog post, we shed light on the importance of the tax assessment report and give companies tips on how they can use the tax assessment report to clarify outstanding tax issues.
In the modern working world, benefits in kind are an effective tool for organising attractive benefits for employees. They enable employers to offer their employees tax-privileged benefits in addition to their regular salary. This allows them to increase employee satisfaction and loyalty without incurring higher non-wage labour costs. The exemption limit for benefits in kind is currently 50 euros per month per employee. Employers can therefore offer their employees benefits up to 50 euros tax-free.
The available range of possible benefits in kind, such as sports programmes, meal allowances or mobility benefits, allows employers to adapt flexibly to the changing needs and wishes of their employees. The tax framework plays an important role here, as it significantly influences the attractiveness and efficiency of these additional benefits. Companies that make targeted use of benefits in kind can not only show their appreciation, but also send a strong signal of their commitment to an employee-oriented corporate culture and ultimately improve their employer branding.
The legal regulation on non-cash benefits aims to draw a clearer distinction between cash wages and non-cash wages. Non-monetary benefits to employees are thus to be better regulated. There is a non-cash benefit exemption limit below which benefits are tax-free.
This exemption limit for benefits in kind was last increased from 44 euros to 50 euros per calendar month at the beginning of 2022. Within this limit, companies can provide their employees with benefits in kind, such as vouchers, credit cards and similar benefits, free of tax and social security contributions.
In addition to the non-cash benefit exemption limit, the regulations on utilisation and other legal provisions also changed in 2022. The vouchers and cash cards issued must comply with the provisions of the Payment Services Supervision Act (ZAG), which stipulates certain legal requirements for the issue and use of payment services or vouchers or cash cards.
As a result of the ZAG, vouchers and cash cards must now comply with the following specific regulations:
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In addition to the regulations of the ZAG, a distinction is also made between closed-loop, controlled-loop and open-loop cards for cash cards for non-cash benefits, so-called non-cash benefit cards:
Differentiation between cash benefits and benefits in kind: BMF letter dated 15/03/2022
50 euro non-cash benefit: Section 8 para. 2 sentence 11 EStG
Exemption limit for 50 euro non-cash benefits: Section 8 para. 2 sentence 11 EStG and R 8.1 para. 3 LStR
Tax treatment of benefits in kind: Section 8 para. 1 EStG
Issue of vouchers: R 38.2 para. 3 sentence 1 LStR
The so-called ‘Anrufungsauskunft’ or ‘Lohnsteueranrufungsauskunft’ explains the conditions under which employers can grant their employees salary extras such as benefits in kind and employee benefits. Companies can obtain this information from their local tax office.
This involves very specific and clearly formulated payroll tax issues and questions of doubt regarding the payroll tax deduction procedure, such as the tax treatment of benefits in kind, salary conversions or the application of lump-sum taxation. Employers and employees can thus have their wage tax obligations safeguarded. The information is binding and legally secure. Companies can obtain it free of charge from the relevant tax office.
Content and responsibilities
In order to obtain an effective information notice, companies should provide the relevant tax office with a detailed description of the facts for which they are seeking tax clarity.
This presentation should include and precisely explain all aspects of the planned non-cash benefit - from the type of benefit to its implementation. Based on this, the tax office can make a well-founded assessment that complies with the tax guidelines.
As a rule, employers apply for the notification information, but employees themselves can also submit an application to their tax office. Alternatively, the tax advisor can also apply for the information as a non-involved party.
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Get infoImportant: A request for a ruling not only contains a detailed description of the planned benefit in kind but also the tax questions that companies want to clarify.
Companies should consider these aspects regarding the benefit in kind to make their request for a ruling effective:
Besides the type of benefit, companies should explain how they provide this benefit to their employees, whether they grant it as a voucher, direct benefit in kind, or allow the use of company property.
Companies should clarify what they aim to achieve with the benefit in kind and indicate whether the benefit is an incentive, a reward for employees, or part of a broader employee benefit program. This helps the tax office understand the context of the benefit.
Companies must state the value of the benefit in kind and how they determined this value. This is relevant regarding exemptions and possible flat-rate taxation.
Companies should mention how they document and prove the granting of the benefit in kind. This includes records of the distribution of vouchers or money cards or the use of company property by employees.
A request for a ruling answered and granted by the tax office strengthens legal certainty for companies. If companies implement the benefit in kind and the employee benefit as described to the tax office in the request for a ruling, the tax office cannot make any subsequent payroll tax demands. Additionally, the request for a ruling provides employees with clarity about the payroll tax treatment of their benefits. Here is an overview of the additional advantages of a request for a ruling for companies and employees:
For companies:
For employees:
Step by step to the request for a ruling - With this guide, you are optimally prepared
In case of uncertainty: If you are unsure about formulating the request for a ruling or do not fully understand the tax implications, we recommend consulting a tax advisor.
NAVIT provides advisory support for you and your company in the request for a ruling - in addition to your tax advisor.
We offer sample documents specifically designed to facilitate the application for a ruling for mobility benefits. These templates are designed to simplify the preparation and submission of the request for a ruling to the tax office and help companies optimally utilize the tax advantages of the NAVIT Mobility Card and other mobility solutions.
If you want to learn more about how NAVIT can assist you in implementing tax-optimized mobility solutions, feel free to contact us.
The NAVIT Mobility Card uses the benefit in kind to provide employees with flexible and sustainable mobility options in a tax-optimized and CO2-compensated manner.
Employees increasingly demand maximum flexibility with the highest possible sustainability. They do not want to commit to one form of mobility or transportation and instead prefer to choose situationally and flexibly.
The Mobility Card gives employees access to all mobility services available to them locally. Up to a mobility budget of 50 euros per month, the use is tax-free.
Advantages of the NAVIT Mobility Card
Disclaimer: We point out that the benefits information and our website are for non-binding informational purposes only and do not constitute actual tax or legal advice. The content cannot and is not intended to replace individual and binding tax and legal advice tailored to your specific situation. All provided information is without guarantee of correctness and completeness.
Despite careful research, the provider cannot assume liability for the accuracy, completeness, and timeliness of the provided information. The information is of a general nature and does not constitute tax or legal advice in individual cases. For concrete questions, please consult a tax advisor or lawyer.
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