Imagine: You order the fantastic dishes from Löwenshare. You save time that you otherwise use for cooking and provide your body with all the nutrients it needs. As if that weren't enough, your employer will help you finance exactly that!
... wait - what?
We know that your employer paying for your food sounds like a utopian fantasy. The good news: it isn't. Because your employer has the option of granting you €44 per month as a benefit in kind.
The essentials in brief:
- You can receive a tax- and social security-free benefit in kind from your employer of €44 per month.
- The benefit in kind is not included in the salary, but represents an additional benefit.
- It can be voucher cards, health club memberships, food baskets, etc.
In order to make use of this factual reference, however, there are of course a few things to consider. What exactly is to be understood by the reference in kind? When does it (not) apply? And what are the benefits? You have the questions – we have the answers:
What is a monthly benefit in kind?
The name says it all: The payment in kind is payment in kind.
According to this, your employer grants you things worth €44 per month. No taxes or social security contributions have to be paid for this. Also, it doesn't matter what kind of job it is. Whether part-time, full-time or €450: the tax-free benefits in kind can be granted to everyone.
In any case, the €44 must not be exceeded by one cent. If this exemption limit is exceeded, your employer has to pay taxes and social security contributions.
With one exception: According to § 8 paragraph 2 sentence 11 EStG , the employee can make additional payments to the €44 out of his own pocket. The monthly benefit in kind of €44 may only be exceeded by the employer - you may pay something yourself, so that the total is more than €44.
Example: You would like an Amazon voucher for €50 as a tax-free benefit in kind. However, the employer may only grant you €44. → You pay an additional €6, get what you want and the employer doesn't have to pay any taxes or social security contributions.
What is included in benefits in kind?
In a nutshell: Everything that is not paid out in cash.
Employees may not receive benefits in kind in the form of cash. Otherwise, these monetary gifts must be taxed like normal wages.
Goods and various services, on the other hand, are legally compliant, for example:
- Vouchers for specific shops: Depending on where the employees' preferences lie, vouchers for fashion or sports shops, restaurants, libraries, etc. can also be used as a benefit in kind.
- Non-cash gifts: There are no limits to the imagination. The employer can finance you drinks, cinema tickets, a gym membership or food packages. Although the search for suitable gifts can be difficult, as an employee you can tell the employer what you would like most.
- Fuel vouchers: Either your employer issues you a voucher and he settles it with the petrol station, or you get a fuel card directly from the petrol station.
- Non-monetary cards: These are cards that promise a high level of flexibility. They are usually linked to several partner networks. So everyone can find what they are looking for. Another advantage: it can be topped up, so that the 44€ add up and the employees can also buy larger ones.
What does not count as a tax-free benefit in kind?
As already mentioned above: The benefit in kind may not be paid out in cash.
The legal situation has also tightened since January 1st, 2020: cash and non-monetary wages are more clearly distinguished from each other. Since 2020, the following benefits in kind have not (or no longer) come under the €44 exemption limit:
- Subsequent reimbursements: It is not possible for employees to purchase something/use a service and then charge the employer for it.
- Money surrogates/money substitutes: Credit and prepaid cards, cheques, Bitcoins or PayPal balances are also not covered by the regulation. Cash cards, such as vouchers, must not have a cash payment function. Otherwise taxes and social security contributions have to be paid.
- Earmarked cash benefits: It is not possible to hand an employer €44 and “direct” him or her to spend it on something specific.
What exactly do you have to pay attention to?
As nice as it sounds: There are - as always - things that have to be considered so that you and your employer really remain tax and social security-free if you make use of the benefit in kind.
You should therefore make sure, for example, that the exemption limit of €44, as described above, is really not exceeded. If you receive something with a value of 44.01€, taxes and social security contributions do not have to be paid for the one cent, but for the entire additional payment. This must be prevented.
However, what does not count towards the basis of assessment: Benefits that you receive for a personal reason. These are, for example, flowers for a birthday, gifts for a wedding, etc. The employer has an additional €60 available for this, which is also tax and social security-free. But be careful: Christmas presents are not personal and count as a benefit in kind.
In addition, you may not have the remaining amount of a voucher paid out in cash. That would no longer only fall under material wages, but also under cash wages, which is not permissible. It is best to clarify with your employer how to proceed with vouchers that you may not need in full.
If you or your employer do not make full use of the allowance of €44 in a month, the resulting remaining amount may not be carried over to the following month.
Advantages of tax-free benefits in kind
In fact, it is obvious:
From the employer's point of view, the employees are motivated and receive recognition. In addition, the company can be perceived much more positively from the outside.
As an employee, you also benefit immensely from the tax-free non-cash benefit: If the salary negotiation does not turn out as desired, for example, you can present the €44 non-cash benefit as an alternative.
You have the option of vouchers for the cinema, gym, etc. You can also discuss with your employer which gifts worth €44 you would prefer.
And this is exactly where we come in: Have you always wanted to try our ready meals? Are you in the mood for a full load of nutrients, prepared in just 3 minutes?
Then just ask your employer if he or she would be willing to get you our ready meals worth €44. That would be a nice win-win situation: the employer ensures more employee satisfaction and you stock your kitchen with nutritious, healthy ready meals.
By the way: From January 1st, 2022, the tax-free benefit in kind will even be raised to €50! If that doesn't call for "trying it out", does it?