ARTICLE · 15 DECEMBER 2022

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Inflation Relief Bonus – Overview And Practical Options

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The inflation relief bonus (Inflationsausgleichsprämie) allows employers to pay their employees a bonus of up to EUR 3,000 tax-free and free from social security costs before 31 December 2024.

GermanyEmployment and HR

The inflation relief bonus (Inflationsausgleichsprämie) allows employers to pay their employees a bonus of up to EUR 3,000 tax-free and free from social security costs before 31 December 2024. In addition to the possibility to make a one-off payment to all employees, the rule provides further interesting options for employers. This article explains the legal basis and what form those options might take.

Background

The inflation relief bonus (also known as just the "inflation bonus") is intended to give employers an incentive to pay their employees an additional bonus. It is a tax-free amount for which social security also does not need to be paid. The rule is comparable to the "Corona bonus". However, after having to extend the "Corona bonus" numerous times, legislators decided to provide a longer time period (more than 26 months) for the payment of an inflation bonus from the beginning.

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