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Tax-free benefits for employees 2021
When are gifts from the boss tax-free?
Does an employer want their employees to receive salary extras tax and social security free this can work with so-called benefits in kind. The idea is that the employee receives part of the salary from his boss not as a cash payment, but as a Good or service. Examples are: restaurant checks, a ticket for a Bundesliga game or a subsidy for the contract for the gym.
The aim is for the employee to receive more net. However, there are some pitfalls when it comes to net wage optimization. Because the boss must have some remuneration componentsin addition to normal wages Pay so that the extra salary is tax-free or can be taxed at a flat rate. This requirement applies to other employer benefits Not.
There is one for goods or services that your company produces or sells yourself Personal discount allowance. This amounts to 1,080 euros per year (Section 8 (3) EStG). Until then, neither wage tax nor social security is due.
For each employee are in the form of Coupons and money cards44 euros per month tax-free and duty-free inside.From 2022 the exemption limit for benefits in kind increases50 Euros.
Examples of such gifts to employees are:
- Vouchers that can only be used for goods and
- Fuel vouchers.
Money gifts Both employers and employees have to pay taxes like normal wages. They are called Cash wages treated. Therefore, the employer pays normal wage tax and social security contributions for this. For goods and services of various kinds, however, can be used as Wages in kindthe 44 euro rule must be applicable.
In order to differentiate such benefits in kind more clearly from cash benefits, the following applies since 2020 a new legal regulation. Basically no benefits in kind, but Cash benefits (Section 8 (1) sentence 2 EStG) are accordingly
- earmarked cash benefits,
- subsequent reimbursement of costs,
- Money surrogates such as credit and prepaid cards as well
- other benefits that are in an amount of money.
However, sentence 3 in the law defines one Exemption For Coupons and Gift cardsthat are used exclusively for the purchase of Goods and services entitle. These include rechargeable gift cards for certain shops and acceptance points, vouchers for shopping centers and city cards that can be redeemed in certain shops. Such money cards may not be considered a payment service, i.e. they may not have a cash payment function. No cash may be withdrawn when exchanging goods.
In order for a voucher to fall below the exemption limit as wages in kind, the employer has had to do so since 2020 additionally at the wages owed anyway. Only then is it tax-free, but not with a salary conversion.
The previous regulations applied until the end of 2019. Until then, the employer could reimburse its employee's receipts up to 44 euros tax-free.
It is important that 44 euros a monthly exemption limit is. All non-cash benefits of this kind are included added up. If this amount is exceeded by just one cent, the employer must pay wage tax and social security for the entire donation. In order to comply with the EUR 44 limit, the employee can own co-payments (Section 8 (2) sentence 11 EStG).
Unused amounts may not be carried over to another month.
If the employer delivers the goods to his employee's apartment, this is an additional service. As a result, they also flow Shipping in the calculation of the benefit (Federal Fiscal Court, judgment of June 6, 2018, Az. VI R 32/16).
Annual contracts are problematic
The donation from the employer is allowed a maximum of 44 euros per month so that it remains exempt from taxes and social security contributions. When it comes to the question of when the wages will be paid, it depends on when the employee has a claim against his employer. This can be a problem with annual contracts, such as corporate membership in a gym. However, the Lower Saxony Finance Court decided that the monthly exemption limit can also be applicable here (judgment of March 13, 2018, Az. 14 K 204/16).
In the case decided, the employer concluded an annual framework contract with a sports facility operator, through which the employees could become members at a discount. They then had a continuous right to use the sports facilities from their company. Participants paid one monthly contribution, so that the monetary benefit for the use was a maximum of 43 euros. With their own share, the participating employees acquired the Monthly usage entitlement. For the next month they could end their participation in the program. In this constellation, the judges recognized a monthly inflow of the monetary benefit below the exemption limit. Therefore, the discounted use of the sports facilities remained tax and social security free. The Federal Fiscal Court has confirmed the decision (judgment of July 7, 2020, Az. VI R 14/18).
Tax-free corona bonus
During the Corona crisis, many employees, especially in the health sector and in retail, have to work under enormous effort and difficult conditions. Employers can appreciate this by offering them a Extra bonus grant. Up to 1,500 euros are allowed in the period March 1st, 2020 until June 30, 2021 Pay out tax and social security free to an employee. Wages in kind are also possible. The bonus must, however in addition to owed anyway Wages be done. There are no restrictions on specific employee groups or industries.
The Corona bonus is a one-time tax benefit, which the Federal Ministry of Finance explains in more detail in an updated letter dated October 26, 2020. It was regulated by law by the Corona Tax Aid Act (§ 3 No. 11a EStG). The tax exemption was originally limited to the end of 2020. With the Annual Tax Act 2020 of December 21, 2020, the deadline was extended by six months, so that employers have more time for the payment. However, it remains at the maximum amount of 1,500 euros in total. If you have already exhausted this in 2020, you will not be able to receive any further tax-free Corona special payment in 2021.
There is another corona measure:Top-up payments to short-time allowancethat are paid by the employer for a wage payment period between March 2020 and December 2021 can also remain tax-free (Section 3 No. 28a EStG). The top-up amount and short-time work allowance together may not exceed 80 percent of the lost wage (more precisely: the difference between the gross target wage and the gross actual wage reduced by short-time work). An increase up to 80 percent of the previous salary remains exempt from taxes and contributions. Any amount beyond that is taxable.
Danger: Even if the short-time work allowance and the supplementary amount are tax-free, they are subject to the progression proviso. This means that you have to state these payments in your tax return. The taxable income is therefore taxed at a higher tax rate.
Tax-free job ticket since 2019
With regard to the Job tickets there has been a change since 2019 (§ 3 No. 15 EStG). Employers are generally allowed to give their employees a tax-free allowance for journeys with public transport between home and first place of work - regardless of whether you provide the ticket as a monthly or annual ticket. You can hand in the tickets at a reduced price or free of charge, or alternatively pay a subsidy.
- Single tickets,
- Multi-trip tickets,
- Season tickets (e.g. monthly or annual tickets),
- Free travel authorizations (for example Bahncard 100) and also
- Discount cards such as Bahncard 25 or 50.
A job ticket is then exempt from taxes and contributions, if it additionally is granted as a wage. The tax break applies to all journeys in publicclosetraffic - including private ones - as well as for journeys between home and first place of work in public Remotetraffic. However, the tax-free grant reduces the employee's deductible distance allowance. Details are regulated in a letter from the Federal Ministry of Finance (BMF) dated August 15, 2019.
The Annual Tax Act 2019 provides for an employer another alternative before: He can give his employee a job ticket and leads for it 25 percent flat rate Wage tax from. Then this benefit Not with the employee's distance allowance counted.
In contrast to the first option, this also applies in cases of Salary conversion. The employee has to contribute financially to the job ticket, but benefits from lower social security contributions and less wage tax.
The employer can alternatively include the job ticket or the travel allowance 15 percent flat-rate wage taxation. However, the employee must then have this advantage with the distance flat rate credit to let.
Bahncard from the boss
If you manage a lot of business trips, then you should talk to your employer about whether they will sponsor you a Bahncard. A Bahncard 25 or 50 reduces the fare by 25 or 50 percent. With a Bahncard 100, you even have free travel on the entire Deutsche Bahn rail network for one year. You can use a Bahncard in addition to the professional also for private trips use.
If the price reductions are higher than the purchase price of the Bahncard during the period of validity, the transfer remains tax-free. The employer should predict whether the Bahncard amortized. You can find details and examples of the Bahncard in the BMF letter of August 15, 2019.
Tax-free reimbursement of travel expenses
If you are traveling on behalf of your company, you could bill the expenses you have borne yourself as income-related expenses.
Alternatively, your employer can reimburse you for the costs of external activities tax-free and duty-free. And at most in the amount of the deductible advertising expenses. This also includes the Flat rates for additional meals. These were starting 2020 increased. In the absence of
- The company is allowed to work more than eight hours a day 14 euros (until 2019: 12 euros) pay,
- more than 24 hours 28 euros (until 2019: 24 euros) and
- on arrival and departure days 14 euros (until 2019: 12 euros).
The employer can also pay you twice the meal allowance and tax you at a flat rate of 25 percent. Then they will arrive at your place without any further deductions.
Employers subsidize meals
Employer grants for food are popular with employees. One variant is the company's own canteen. If the employee pays at least the official value in kind, which is set anew every year, then the cheaper meal is free of income tax and social security.
The official non-cash benefits apply to discounted or free meals. For 2021 they are for a
- Breakfast 1.83 euros (2020: 1.80 euros),
- Lunch or dinner € 3.47 (2020: € 3.40).
If the employee pays a lower personal contribution, the monetary benefit is taxable. The employer can apply the personal tax rate or a flat rate of 25 percent for this. With the flat tax, the employee has no further deductions.
Example: An employee pays EUR 3.50 for lunch in the canteen. The food remains exempt from income tax and social security contributions. If he only paid 3 euros in 2021, the taxable monetary benefit would be 47 cents. This is taxed at 25 percent, plus 5.5 percent solidarity surcharge and flat-rate church tax of 7 percent.
Without a canteen, there is another option for the meal allowance: Restaurant checks or meal voucherswhich the employer hands over to his employees. These can be redeemed in cooperating restaurants or grocery stores.
The employer can hand in a restaurant check with a value of up to 6.57 euros (2020: 6.50 euros) for each working day. The value is made up of the official payment in kind of EUR 3.47 (2020: EUR 3.40) and an additional EUR 3.10, which the employer can contribute tax-free. If the employee pays at least the official value in kind out of pocket, the meals are completely tax-free and social security-free. The flat-rate tax can be avoided by making a corresponding additional payment. If the additional payment is lower, the difference to the value in kind must be taxed as wages. As a rule, the employer applies the flat rate tax. In many cases, he does it too.
According to the restaurant check provider Sodexo, a company with a meal allowance can increase its net wages by up to 1,445 euros per employee per year from January 2021.
An alternative to the paper voucher is that digital food stamp. This works, for example, with the Lunchit app from Spendit. Employees can choose a restaurant or supermarket for each lunch and take a photo of their receipt with a smartphone. The app reads the receipts and manages the employer's meal allowance. The employee receives his or her individual reimbursement amount with the pay slip.
Supplementary company health insurance can be benefits in kind
Some employers support their employees financially with additional health insurance coverage. Supplementary health insurance covers, for example, extra services in the hospital or for dentures. If the employer, as the policyholder, takes out company health insurance for his employees and pays monthly contributions of a maximum of 44 euros (from 2022: 50 euros), then there is a tax-privileged benefit in kind. This is what the Federal Fiscal Court decided (BFH, judgment of June 7, 2018, Az. VI R 13/16).
Because here is the employer concrete servicespromised. Therefore, the contributions taken over are as Donation in kind to be assessed and in this case remain exempt from taxes and social security.
Different is the situation when the employee himself signs a contract for supplementary health insurance and receives a monthly allowance from the company. Even if this remains below the EUR 44 exemption limit, this represents Cash wages and therefore wage tax and social security contributions are due (BFH, judgment of July 4, 2018, Az. VI R 16/17).
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