If companies want to do something nice for their employees, they have the possibility to give away goods or services worth € 44 per month to their employees free of tax and social security contributions.
We will explain what the so-called tax-free non-cash benefit is and how you can use it to do something nice for your employees, whether in the office or in home office.
1. What exactly is the € 44 tax-free non-cash benefit?
- Companies are allowed to provide employees with monthly non-cash benefits of € 44 within the scope of the law (§ 8 para. 2 sentence 11 EStG), regardless of salary.
- No taxes or social security contributions are levied on this amount, neither for the employer nor for the employee. If the value exceeds € 44, the entire amount is taxable.
- There must be no possibility of a cash payment of the € 44.
- Classical examples of such benefits are fuel vouchers, shopping vouchers etc.
- Employees do not have to spend the entire amount of the non-cash benefit in the same month, but can save them up as they wish.
- Companies often use the tax-free non-cash benefit of € 44 as a means of saying thank you to employees.
☝️ Can coffee in the office be tax deductible? Yes, we show you how.
2. What changes have there been since 01.01.2020?
- Non-cash compensation must be granted in addition to the salary owed and may not be converted into non-cash compensation.
- Cash benefits for a purpose specified by the employer and subsequent reimbursement of costs are no longer covered by the € 44 regulation and are no longer tax-free. The same applies to vouchers or cash cards which can be used to withdraw cash.
- Vouchers and rechargeable gift cards, with which employees can only obtain goods or services, remain valid as tax-free non-cash benefits. These may only be used nationally and individual agreements must exist with the redemption locations concerned.
- Section 2 (1) No. 10 a), b) or c) of the Payment Services Supervision Act (Zahlungsdiensteaufsichtsgesetz, ZAG) defines that vouchers and cash cards must be part of a limited network (e.g. a retail chain), a limited product range (e.g. fuel card) or instrument of a fiscal or social purpose (e.g. meal voucher) in order to retain their validity as tax-free non-cash benefits.
Please note that there will be further changes from 2020 onwards and we focused only on the most important changes.
3. Two examples of how you can use the tax-free amount of € 44 for your employees with Coffee Circle
Surprise your team with our Care Packages with selected products from us and other companies from Berlin. Our Care Packages start at a price of 39 € excl. VAT. You are welcome to include a personal message to your employees with the package. No extra effort for you, we take care of the shipping to your employees.
P.S.: You might still be thinking about, if there will be a Christmas party with the whole team this year because of the security measures against Covid-19. The tax-free benefit also applies to Christmas gifts that you can send to your employees.
Note: Coffee Circle is not available for tax advice and is not liable for the applicability of the non-cash benefit in individual cases. All information is provided without guarantee. Please contact your tax advisor for detailed and binding advice on the tax-free non-cash benefit.