SteuerGo FAQs

Who receives the inflation adjustment bonus?

If employers grant their employees an inflation bonus (inflation, inflation rate, rate of price increase), this is tax and social security-free up to an amount of 3,000 Euro. The condition for tax exemption is that the benefit is granted in addition to the salary already owed. The regulation applies to payments made between 26.10.2022 and 31.12.2024 (§ 3 No. 11c EStG).

Naturally, new regulations often raise questions, such as whether the payment of an inflation bonus is mandatory for employers. And, if it is paid, whether employers must distribute it equally to all employees of the company. The answer to the first question is "No, there is no obligation". The second question was answered by Parliamentary State Secretary Katja Hessel following an inquiry by Member of Parliament Fritz Güntzler (CDU/CSU) as follows:

"The tax exemption for the inflation bonus decided with § 3 No. 11 EStG does not include a regulation that the bonus must be paid to all employees. It is also a tax allowance that can be paid to employees in instalments within the benefit period" (Bundestag document 20/3987 of 14.10.2022).

Even though both the basic payment of the inflation bonus and any distribution among employees are at the employer's discretion for tax purposes, different practices may arise from collective or employment law. Employers may not arbitrarily favour certain employees or disadvantage others. If not all employees receive a bonus or if it is paid in varying amounts, there must be objective reasons for the different treatment. Otherwise, the principle of equal treatment applies under employment law.

 

Information on the inflation bonus can be found in the official Q&A catalogue of the Federal Ministry of Finance.