5 December 2023
Employment Tax
Impact: Medium
Summary
In July 2022, we informed you about the tax measures to support those affected by the war in Ukraine. Due to the ongoing war, these measures have now been extended until December 31, 2024.
The Detail
This bulletin concerns the wage tax treatment of employer contributions to employees affected by the war in Ukraine, as well as the waiver of wages by employees for the purpose of aid and donations for Ukraine.
Under certain conditions, aid and support from employers to their injured employees is tax- free. Financial support of up to 600 euros can be paid out tax free. A higher amount is only tax-free if it is a special emergency, such as in the case of war refugees. Employees who take out loans due to war damage and receive interest subsidies from their employers also benefit from the tax exemption. Transfers of use of motor vehicles, apartments or accommodation and other goods that are no longer available due to the war are also covered by the tax exemption. The same applies to free meals for employees who are no longer able to provide for themselves.
Furthermore, employees in Germany have the option of waiving part of their salary and using it for donation purposes. Such salary components are then not considered in the taxation of wages. This salary waiver can be made either as part of an allowance from the employer to war-disabled employees or as part of a payment by the employer to the account of an organization entitled to receive donations.
In order to claim the tax exemption, certain wage tax requirements must be met, including a corresponding record in the payroll account. It must be documented that the supported employee has suffered damage as a result of the war.
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