Benefits in kind (Sachbezüge) are benefits provided by the employer to employees that offer them a non-cash benefit but are not paid out as a salary. The employer usually grants a benefit in kind in addition to the usual salary, often instead of a salary increase. It is a non-cash benefit if the employee would normally have to spend (more) money to receive the same benefit. Classic examples in the area of mobility are a company car provided for private use, a job ticket or petrol vouchers.
What is a benefit in kind (Sachbezug): term and definition
Remuneration in kind is remuneration that is not paid out in cash but in the form of non-monetary benefits paid to employees in addition to their salary. Other terms for non-cash benefits are benefits in kind and benefits in kind. A non-cash benefit can be granted to employees as part of their remuneration.
In principle, non-cash benefits or benefits in kind for employees count as taxable salary and are therefore taxable. However, benefits in kind are completely tax-free up to an exemption limit of €50 per month and are therefore a popular benefit for employees.
Possible benefits in kind include, for example, any goods and services, vouchers for the purchase of goods and services and also credit cards that serve as a means of payment. Other tax-free benefits for employees can be earmarked employer allowances, such as meal allowances, travel allowances or internet allowances.
Difference between benefits in kind and non-cash benefits
The tax exemption mentioned at the beginning makes the difference between a non-cash benefit and a non-cash benefit: a non-cash benefit must always be taxed. If benefits in kind granted exceed the exemption limit or the allowance of 50 euros, they are categorised as non-cash benefits and are subject to flat-rate taxation.
How does the non-cash benefit affect the salary?
According to Section 8 (1) sentences 2 and 3 of the German Income Tax Act (EStG), benefits in kind are classified by law as "income in cash, earmarked cash benefits, subsequent reimbursement of costs and cash surrogates". They are therefore subject to tax and social security contributions. This means that benefits in kind increase the employee's gross salary and therefore also their income tax and social security contributions.
However, there is an exemption limit for benefits in kind. This has been 50 euros since 2022. Benefits in kind are therefore exempt from tax and social security contributions up to an amount of 50 euros per employee per month (Section 8 para. 2 sentence 11 EStG). If the non-cash benefit value exceeds this exemption limit, not only the difference must be taxed, but the entire amount in full - the non-cash benefit is then considered a non-cash benefit and a flat-rate tax is payable. If the employer grants several benefits in kind at the same time, these are added together. The following also applies here: If the combined value of the benefits in kind exceeds the 50 euro exemption limit by even one cent, the entire amount must be taxed at a flat rate.
Furthermore, benefits in kind may not be totalled or added up for the year; all amounts that have not been spent by the end of the month are forfeited.
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The non-cash benefit in payroll accounting
The following payroll schema provides a simplified illustration of remuneration in kind in payroll accounting. The non-cash benefit corresponds to a certain amount of money in the payroll run.
Gross wage/ gross salary
+ non-cash benefit (non-cash benefit)
= total gross amount
- Wage tax
- Church tax (only if indicated on the income tax card)
- Solidarity surcharge
- Employee's share of social insurance
= Net wage/net salary
- Benefit in kind (non-cash benefit)
= Amount paid out
The non-cash benefit must be deducted from the net salary as it is only subject to taxation and contribution calculation. If the deduction were not made, the employee would have both the non-cash benefit (e.g. free private use of a company car) and the monetary amount. The non-cash benefit therefore only increases the gross tax and social security contributions.
Documentation obligation of the employer
The employer must document all benefits in kind in the employee's payroll account. This also includes copies, e.g. of vouchers. This is also the case if the non-cash benefit remains below the tax-free amount of 50 euros. However, companies have the option of applying to the local tax office for relief. If it is permanently guaranteed that the benefits in kind do not exceed the allowance each month, employers do not have to document these benefits in kind in the payroll account.
Values for benefits in kind 2024
The most common non-cash benefits are
Accommodation: Free or discounted living space
Meals: Free or discounted meals in the company canteen
Travel allowance: Job tickets for public transport or kilometre allowance for cars
Private supplementary insurance: Supplementary health insurance, supplementary dental insurance, sick pay
The amount of the non-cash benefits is determined in advance by the federal government for each calendar year. In this way, the legislator wants to ensure that employees who receive benefits in kind instead of a cash salary pay a social security contribution in line with their income.
This is in the interests of employees, as it is the only way to ensure that they are entitled to full benefits from health, long-term care and pension insurance as well as labour promotion. If the non-cash benefit values were not defined, only the salary paid would be counted, but not the additional non-cash benefits received.
Non-cash remuneration values are primarily relevant for meals and accommodation. In 2024, the monthly value for meals is 313 euros. The monthly value for accommodation and rent has been set at 278 euros.
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Examples of benefits in kind ar
Many employers want to grant their employees employee benefits in the form of non-cash benefits, but want to make this as convenient as possible for them in terms of employee satisfaction. Prepaid credit cards are suitable for this purpose. Employees can use these cards to access various offers via a benefits platform. In contrast to the "conventional" non-cash benefit, companies can also allow employees to save up credit to fulfil larger wishes, for example.
Many providers of benefit-in-kind cards usually allow companies to book benefit offers in different modules, for example to match the benefit-in-kind value of 50 euros or for gifts in kind on special occasions for 60 euros.
The tax-free 50 euro non-cash benefit is by far one of the most popular and best-known employee benefits. The non-cash benefit is particularly popular not least because of its wide range of possible uses. Employers can choose the right benefit for them and their employees from a large pool of benefits. For example, the non-cash benefit can be used as a voucher for goods and services, as a rechargeable - and ideally digital - credit card or as a reimbursement of expenses, especially as support for employees' daily mobility.
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