The so-called inflation premium “Teuerungsprämie” was passed on 30 June and has already been published. It is intended to enable employers in 2022 and 2023 to grant their employees an additional bonus on a preferential basis due to current price increases.
If an inflation premium is paid out, a tax exemption applies in principle for up to 3,000 euros. Up to an amount of 2,000 euros per year, the premium can remain tax-exempt in any case. A further 1,000 euros are exempt if certain conditions are met, including that such a premium bonus is based on a wage-forming regulation or is granted to all or groups of employees. In particular, the reference to the collective agreement as one of the possible preconditions suggests that preparations have already been made for the next wage round with the possibility of keeping a general increase in salaries lower by means of a (tax- and duty-free) one-off payment of up to 1,000 euros.
As with corona bonuses, the inflation premium must be an additional payment that has usually not been granted before.
ATTENTION: The inflation premium must share the “allowance pot” with the employee profit-sharing scheme!
The inflation premium is only tax-exempt to the extent that it, together with the tax-exempt profit-sharing, does not exceed the amount of 3,000 euros per year. In return, however, you may convert an employee profit-sharing already paid out into an inflation premium.
IMPORTANT: Unlike profit-sharing, the inflation premium is also free of ancillary wage costs and social contributions! This makes it much more interesting for employers.
All in all, this new regulation can be seen as quite controversial. On the one hand, the exemption of the cost-of-living bonus from social security and social security contributions is very welcome. However, the separation of the possible total amount of 3,000 euros per employee into two parts makes implementation unnecessarily complex. The linking of the two tax arrangements to a common “ceiling” is generally difficult to understand, since the two instruments – at least theoretically – pursue completely different goals.
In any case, if you have already agreed employee profit-sharing schemes with employees in 2022, check the retroactive reclassification as an inflation premium! – We will be happy to advise you on this!