Germany: Two Months Left for Employees to Receive Tax Free Special Payments

This exemption has allowed for employers to pay grants and subsidies up to 1,500 euros per employee between 1 March 2020 and 31 December 2020, free from tax and social security contributions, provided that the special payments are paid in addition to wages owed anyway. Special payments can be granted in either cash or in kind.

The tax-free benefits should be recorded in the payroll account and any other tax exemptions and valuation allowances remain unaffected. This also benefits the employer as no employer social security contributions are due on this.

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