Germany: Energy-related lump-sum payment for employees, payroll tax implications for employers

The aim of the measure is to provide relief given significant price rises, especially in the energy sector.

To provide relief given significant price rises, especially in the energy sector

The Bundestag on 12 May 2022 passed tax relief legislation that includes an energy-related lump-sum amount that is to be paid out by employers to their employees in September 2022.

  • The aim of the measure is to provide relief given significant price rises, especially in the energy sector.
  • All those actively employed are entitled to the lump sum for energy costs in the amount of €300.
  • Employers will be compensated for this lump-sum payment through a deduction from the total amount of payroll tax to be withheld for the payroll tax filing for August 2022.
  • Another provision provides for an increase in the employee lump-sum allowance by €200 (increased to €1,200) and an increase in the basic tax-free allowance by €363 (increased to €10,347). Both measures apply retroactively from 1 January 2022. As a result, these retroactive increases will affect certain already made payroll tax deductions.

Measures to implement a package proposed in April 2022 for companies affected by the consequences of the war in Ukraine as part of a “protective shield” (Schutzschild) and that includes an energy price allowance for companies in specific sectors facing higher additional costs due to the rise in gas and electricity prices, have not yet been announced.

Read a June 2022 report [PDF 1.2 MB] prepared by the KPMG member firm in Germany 

 

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