Tax Return: Getting a Bonus? This is How Award Winners Can Also Save on Taxes
Some bosses pay their employees bonuses for good performance. Depending on when and how the bonus is paid out, the tax decreases - or is waived entirely.
In Germany, bonus payments are subject to taxes and social security contributions, unless they are paid for specific purposes or in certain forms. The tax on a bonus is calculated as if it were paid proportionally throughout the year, to prevent a sudden increase in tax burden. Employers typically handle the correct taxation of bonuses, so employees do not need to file a tax return.
Bonus payments can be made tax-free if they are paid into a company pension plan, used for childcare fees, or take the form of certain benefits such as job tickets, meal allowances, or health courses.
Written by urgent.news from Handelsblatt's report — not a translation of it. Machine-written — may contain errors; check the original before relying on it.
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