20 September 2023
Employment Tax
Germany | Planned employment tax changes from 2024
Impact : High
Summary
On August 30, 2023, the German Cabinet approved the government’s draft for a so-called “Growth Opportunities Act”, which also includes some changes to wage tax. This bulletin outlines the most important changes from 2024.
The Detail
Additional expenses for meals
The domestic per diems for meals deductible as income-related expenses are to be increased as follows:
Increase of the tax-free allowance for company events
Insofar as benefits paid by the employer to his employees and their companions on the occasion of company events do not exceed the amount of EUR 150 (previously EUR 110) per company event and participating employee, they are not taxable as wages. The other requirements remain unchanged.
Fifths rule for wage tax
Currently, an income tax rate reduction for certain wages (remuneration such as compensation for multi-year activities) is already taken into account when calculating the wage tax. The procedure is to be abolished, as it is very complicated for employers to implement and often does not lead to a tax advantage for higher incomes. Employees should still be able to claim the rate reduction in the income tax return.
Contributions for group accident insurance
Employers can tax the contributions for a group accident insurance with a flat tax rate of 20 % (on wages) if several employees are insured under one accident insurance contract and the average amount without insurance tax does not exceed EUR 100 in a calendar year. The threshold amount is to be abolished altogether.
Contact us
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
Anna Liepelt
Senior Manager
anna.l.liepelt@vialto.com
Further information on Vialto Partners can be found here: www.vialtopartners.com
Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.
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Further information on Vialto Partners can be found here: www.vialtopartners.com
Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.
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