The German federal government has now implemented point ten of its third relief package. It says: “The federal government is ready to exempt an amount of up to 3,000 euros from tax and social security contributions in the event of additional payments from companies to their employees,” reported the “Welt”. The necessary change to the income tax law in this regard has already been announced in the Federal Law Gazette. This relief is valid from today until December 31, 2024. With the reason: To mitigate the increased consumer prices. The conditions: the bonus must reach the employee without deducting taxes and social security contributions and must be paid out in addition to the regular salary. And the inflation premium must not replace a bonus payment that is due anyway.
Whether an entrepreneur wants to compensate his employees for the loss in value of their income is up to them. This relief is based on a voluntary basis. However, if an employee has three generous employers, he can benefit from the bonus three times, as the wage tax assistance association explains. The inflation premium is intended as an interim solution to prevent the permanently higher salaries caused by high inflation from triggering a wage-price spiral. So when the game of higher prices and the associated price increases are constantly going in circles.
