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Germany’s Energy Price Allowance Payments For Employees—What Employers Need To Know – Employee Benefits & Compensation


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Under the new German Tax Relief Act 2022, as of September 1,
2022, employees subject to income tax are entitled to a one-time
lump-sum energy price allowance in the amount of €300. The
allowance is intended to mitigate the currently high consumer costs
for electricity and fuel.

Employers are required to pay the €300 energy price
allowance to all employees and apprentices that they employ on
September 1, 2022, and, subject to wage tax classes I to V,
regardless of the duration and scope of the employment
relationship. Payments would be made in the course of the September
2022 payroll cycle. They would be subject to wage tax withholdings
but exempt from social security contributions.

The Tax Relief Act 2022 includes special rules that apply to
individuals working in so-called mini-jobs (i.e., employees who are
marginally employed). These employees must confirm upfront in
writing to their employers that their marginal employment is their
primary employment. The law requires that the confirmation be kept
with the wage tax documentation. For mini-jobs taxed at a flat
rate, the energy price allowance is tax free.

The law provides that employers would be reimbursed for the
energy price allowance payments they make in the course of their
payroll wage tax declarations. For this purpose, they may set off
the energy price allowance payments against the total amount of
wage taxes they have to declare and pay to the tax authorities in
the month in which allowance payments were made.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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