Energy Price Benefits for Employees in Germany – What Employers Need to Know | Ogletree, Deakins, Nash, Smoak & Stewart, CP

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Under the new German Tax Relief Act 2022, effective September 1, 2022, employees subject to income tax are entitled to a one-time lump-sum compensation for the price of energy in the amount of €300. The allowance is intended to mitigate current high consumer costs for electricity and fuel.

Employers are required to pay the energy price premium of €300 to all employees and apprentices they employ on 1 September 2022 and, subject to payroll tax classes I to V, regardless of the duration and extent of the employment relationship. Payments would be made during the September 2022 payroll cycle. They would be subject to payroll tax deductions but exempt from payroll taxes.

The Tax Relief Act 2022 includes special rules that apply to people working in so-called mini jobs (i.e. marginally employed employees). These employees must confirm in writing to their employer that their marginal job is their main job. The law requires that the confirmation be kept with the payroll tax documentation. For mini-jobs taxed at a flat rate, the reduction in the price of energy is exempt from tax.

The law provides that employers would be reimbursed for the reductions in the price of energy that they pay within the framework of their withholding tax declarations. For this purpose, they may deduct the energy price compensation payments from the total amount of wage tax which they must declare and pay to the tax authorities in the month in which the energy price compensation payments are made. compensation have been made.

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