Article:

Tax-exempt Covid-19-Bonus

17 December 2021

As in the calendar year 2020, employers can pay their employees bonuses and allowances of up to EUR 3,000 per employee for the calendar year 2021 - free of wage tax, social security and ancillary wage costs (DB, DZ and KommSt) - in recognition of their extraordinary efforts during the Corona crisis. 

This is subject to the condition that these payments

  • do not constitute a conversion of previously granted bonuses,
  • are solely for the purpose of reward in connection with Covid-19, and
  • be paid out by February 2022.

Rewards paid under previous performance agreements are therefore not tax-free. However, a tax-free payment of a Corona bonus in the previous year does not prevent a renewed tax-free payment for 2021.

This was decided by the National Council on December, 16th, 2021; it remains to be seen whether it will become law.