22 March 2023
Employment Tax
Impact: High
Summary
This bulletin summarises the fiscal measures recently introduced by the German government in the wake of the earthquakes in Turkey and Syria.
The detail
On 27 February 2023, the Federal Ministry of Finance announced tax relief for aid to the areas impacted by the earthquakes, in addition to introducing a wage waiver for employees donating to the victims of the earthquake. The regulations apply to benefits that accrue until 31 December 2023.
These measures introduced are outlined below:
➢ Aid and support from employers to employees affected by the earthquake in Turkey and Syria are tax-free under certain conditions. Financial support may be paid tax-free up to EUR 600 per calendar year. Amounts in excess of this threshold are only tax-free if it is a special emergency (in general however, an employee affected by the earthquake can be considered a special emergency).
⮚ Employees who take out a loan due to the earthquake and receive interest benefits and/or subsidies in relation to the loan from their employers also benefit from the tax exemption, provided that the loan does not exceed the amount of the damage incurred.
⮚The use of company cars, flats or accommodation, the granting of free meals or the use of other items lost by the employee due to the earthquake and provided by the employer are also covered by the tax exemption.
⮚Employees in Germany have the option of waiving a part of their salary and using it for the employer’s charitable purposes. These wage components are not to be taken into account in the taxation of wages if the employer fulfils and documents the requirements.
Note: where tax exemptions are being applied in relation to the above supports, these must be documented on the employee’s wage account. Wage waivers which are applied are not to be recorded in the wage tax certificate however.
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