Inflation bonus of up to 3,000 euros for employees
In recent months, many people had to accept noticeable cost increases for energy and food, among other things, as a result of the Ukraine-Russia war. As a consequence, the German government has introduced a third relief package. The inflation bonus is part of the further relief package of September 3, 2022. This is intended to ease the financial pressure on employees. Employers can pay up to 3,000 euros in special payments, which are exempt from tax, with immediate effect. The payments will be tax- and social security-free until the end of 2024.
Inflation compensation premium is voluntary for the companies
In general, all employees can receive the bonus. Both full-time and part-time employees as well as marginally employed employees such as mini-jobbers, working students and trainees can receive bonus payments for inflation compensation. However, the distribution of inflation compensation bonuses is generally voluntary. Companies can decide for themselves whether and how much to pay their employees.
The inflation compensation bonus is therefore a voluntary benefit paid by the employer. In addition, there is no regulation that the bonus must be paid to all employees. Nevertheless, equalization is advisable, because inflation affects everyone.
Companies pay inflation bonuses in part payments
Many companies have already announced that they will pay their employees an inflation bonus. An interesting rule here is to split the inflation bonus distribution into partial payments. The distribution period until the end of 2024 makes this possible. In this way, the tax-free special bonus payments can be planned and made over the longer term. For example, the inflation bonus could be spread over months or quarters so that the costs for this are not just recorded at one point in time. We think the inflation bonus is a good idea and we also pay our employees corresponding special payments.
Premiums in the form of non-cash benefits
Employers may also pay the inflation bonus in cash or in kind. However, these must be used to relieve the employers during the high inflation. These include gasoline coupons as well as merchandise or meal vouchers. However, if a company already pays benefits in this form, these may not be converted into the inflation bonus.
Regulations on the inflation compensation bonus
The basis for the bonus is the „Act on the Temporary Reduction of the Sales Tax Rate on Gas Deliveries via the Natural Gas Grid“. This was promulgated on October 25, 2022 and will enter into force retroactively as early as October 1, 2022.
- The period for payment of the bonus is limited. However, the time span extends from October 26, 2022 to December 31, 2024, giving employers flexibility.
- The bonus is tax- and social insurance-free up to an amount of 3,000 euros.
- The tax-free amount can also be paid out to employees in part payments instead of in a single distribution.
- Bonuses in the form of non-cash benefits are also possible.
- The inflation bonus is paid in addition to the general wage, but is not obligatory for employers.
If you, as an entrepreneur, have any questions about this, such as how you would like to structure a bonus distribution in your company, we would be happy to assist you as a contact.