Monetary benefits: What companies and employees should know

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There are numerous ways to provide employees with additional benefits in addition to their salary. Not all of them are automatically taxable. In our latest legal tip, you will learn what exactly is meant by a non-cash benefit, which benefits remain tax-free and why these benefits can be attractive for both employers and employees.

What is a non-cash benefit?

A non-cash benefit is when an employer provides their employees with additional benefits in addition to their salary that have an economic value. These benefits are generally considered taxable wages and are subject to social security contributions, unless a statutory tax exemption applies.

Examples of tax-free non-cash benefits

Charging electric vehicles at the employer's premises
Free or discounted charging of electric or hybrid vehicles at the workplace is tax and social security free until the end of 2030, regardless of whether it is a private or company vehicle. Wall boxes for private use that remain the property of the employer are also favored, but not the charging current at home.

Travel allowances
Benefits for public transportation, such as subsidized season tickets, are completely tax-free. If you use your own vehicle, a flat-rate taxed allowance (15%) is possible up to the distance allowance. This is often a more favorable model than individual taxation.

Childcare costs
For children of employees who are not yet of school age, employers can provide subsidies for childcare, for example in daycare centers or with childminders. These benefits are tax-free and not limited in amount. However, it is important that the care takes place outside of the employer's own household. Costs for care provided by relatives in the employer's own home are not tax deductible.

What are the advantages for employers and employees?

Non-monetary benefits enable employers to optimize costs while supporting employees in a tax-efficient way. For employees, they often mean more net from the gross without having to adjust the basic salary. The monetary advantage can thus contribute to motivation and helps companies to retain skilled workers or attract new employees in a targeted manner.

The statements represent initial information that was current for the law applicable in Germany at the time of initial publication. The legal situation may have changed since then. Furthermore, the information provided cannot replace individual advice on a specific matter. Please contact us for this purpose.