Employers can offer employees various benefits in addition to their salary - whether company cars, laptops, benefits in kind or even staff discounts. Such a pecuniary advantage is very popular: companies want to motivate them, employees are happy about the additional earnings. But is a monetary benefit really worth it? Additional services usually have to be taxed. However, there are regulations and limits up to which monetary benefits can remain tax-free. Here you can find out what a pecuniary benefit is, what options there are and how they are taxed.
What is a pecuniary benefit?
A pecuniary benefit is an additional form of compensation that employees may receive from the company. Unlike the salary , non-cash benefits are not paid out, but consist of (non-cash) benefits that are made available to the employee. There is talk of a "monetary" advantage because the remuneration option is not available in cash, but puts the employee in a better financial position.
A monetary benefit leaves more money because employees don't have to dig deep into their own pockets, or at least not that deeply. Popular examples are a company mobile phone, company laptop, vouchers for goods and services, discounts or even the classic company car. Such a service or benefit in kind is an attractive alternative to a salary increase . The reason: Both sides can save taxes.
In addition, a pecuniary benefit is a special sign of appreciation and can be a tool for employee motivation.
Monetary benefit: Benefits and allowances
Below we have compiled a large list of the most popular and common non-cash benefits that employers can offer. In addition, we explain which allowance you can use for the individual services so that the monetary benefit remains tax-free - or how it is taxed:
Monetary advantage company car
A company car is a particularly popular monetary benefit. Employers may provide a vehicle at company expense. The taxation depends on whether the car may be used privately or is only available for business use. For private use, the company car can be taxed using the one percent rule.
This means that employees pay tax on one percent of the gross list price of the car and a further 0.03 percent of the gross list price for each kilometer between work and home. This sum will not be paid out - but will be credited to your salary and taxed as additional income. It is therefore subject to tax and social security contributions for employers and employees.
Monetary benefit: Example of a company car
The list price of the company car is 20,000 euros and there are 20 kilometers between work and home. From this, the additional tax burden for the non-cash benefit is determined:
1 percent of the gross list price
0.01 multiplied by 20,000 euros results in a value of 200 euros for the first part of the one percent rule.
0.03 percent per kilometer
The calculation here is: 0.0003 * 20,000 euros * 20 kilometers. For the example, another 120 euros must be taxed.
For the monetary benefit of a company car, this employee would have to pay tax on an additional 320 euros each month. For example, instead of the previous 2,800 euros, the pay slip would use 3,120 euros as the basis for taxation. Rule of thumb for company cars: the more expensive the company car and the greater the distance, the higher the monetary benefit and thus the deductions.
As an alternative way of calculating the monetary benefit of a company car, a logbook can be kept. This makes sense if the company car is mainly used for business purposes. All journeys are precisely recorded here. The more frequently the car is used for business purposes, the more profitable it is to keep a logbook.
Monetary Benefit Calculator
A company car as a monetary benefit sounds tempting, but it should be calculated beforehand. An expensive car over a long distance can lead to a significantly higher tax burden. Depending on the individual situation, the fees are so high that the additional service is not an advantage, but rather a financial disadvantage. You can calculate exactly whether the company car is worthwhile with our free calculator:
Laptop, tablet and mobile phone
Technical devices such as laptops, tablets or smartphones can be left to the employee for private use. This also applies to printers or software, for example. This is completely tax-free for both parties if the devices officially remain the property of the employer. In the event of termination, they must be returned accordingly. The regulation does not apply if an employee buys one of the examples mentioned and then invoices the company.
If a laptop or smartphone is to be given to an employee, the employer must pay 25 percent as a flat-rate tax.
Workwear
Employers can make subsidies that are exempt from tax and social security contributions: However, only for clearly defined work clothing that cannot be worn in your free time – for example clothing for nurses, safety shoes. Not deductible: the business dress of a banker.
Benefits in kind
Benefits in kind can be, for example, job tickets, fuel vouchers, restaurant vouchers, admission tickets or vouchers for goods. Every month these are exempt from taxes and duties by the employer up to an exemption limit of 50 euros. If the exemption limit of 50 euros is exceeded, the entire amount must be taxed. It is also important that the benefit in kind is clearly distinguished from a monetary benefit.
Food stamps
There are defined benefits in kind for board and lodging. Employers can support lunch with a daily contribution of EUR 3.57 (as of 2022) – you must pay tax on this amount as a benefit in kind. Your employer can add another 3.10 euros to this check – these 3.10 euros are not taxable. The catering can be supported with a total of 6.67 euros.
If your employer taxes the check at a flat rate , you get the same amount gross as net and do not have to pay any taxes. Like fuel cards, these vouchers are clearly earmarked. Means: Only food, alcohol and tobacco are excluded.
Health promotion
Companies can make contributions to promote the health of their own employees. An allowance of 500 euros is available every year, which is tax-free in addition to the salary. For example, courses on recuperation, stress management or relaxation can be financed. Massages and other services are also possible. Condition: Only fitness studios or other providers with health insurance approval may take over this health promotion.
Employer-funded pension
A company pension scheme allows part of the salary to be invested in direct insurance, pension funds or a pension fund, for example. In this way, you can increase your future pension payments and provide better security for old age. This can also be a form of pecuniary benefit.
Childcare
Grants for kindergarten or other care facilities for children who are not required to attend school are tax-free for parents. The boss can participate tax-free in the regular care of the children of the employees. In theory, the company can even cover the entire cost without employees paying taxes or social security contributions.
A further 600 euros can be reimbursed tax-free if it is a question of short-term care for children under the age of 14. This regulation applies to emergencies, for example for part-time employees who need temporary help with care for a certain period of time. The age limit of 14 does not apply to children with disabilities.
Parking Spaces
If you are provided with a parking space during working hours or at a cheaper price, no taxes or social security contributions are due. This also applies if the employer rents a parking space separately.
Asset Sharing
Employers can provide employees with shareholdings free of charge or at a reduced price. This is tax-advantaged: Up to a value of 1,440 euros, such asset participations are tax-free. Corporations can give their own employees shares in their own company of up to 1,440 euros - this remains free of charge for employees.
Staff Discount
Many employees receive products or services from their own employer at a discount or even free of charge. Such a staff discount represents a pecuniary advantage. Due to the discount amount of 1,080 euros per year, however, you only have to pay tax on what goes beyond that. The law also specifies a value deduction of four percent in the calculation.
Bonus Miles
A special case, because here the monetary benefit does not come directly from the employer, but is only related to your professional activity. As a frequent flyer you can earn bonus miles. You can use these privately tax-free. Prerequisite: As with the staff discount, the value of the bonus miles collected must not exceed EUR 1,080 per year. Since the bonus miles came from business flights, your employer can request that they also be used for other business flights.
Tool Money
Do you need tools to do your job - whether it's a hammer, pliers or a screwdriver? Then these are often provided by the employer, but agreements are also possible according to which employees take care of their tools themselves. In this case, you can receive a tax-free tool allowance from your employer to compensate you for the private expenses.
Continuing education
If the further training is clearly related to the work, the company can bear the costs. This is tax-free for employees if the employer concludes the contract or at least there is a written promise that the costs will be borne by the company. If this is not done, the employee can deduct the cost of a course from tax as income-related expenses. However, this option is no longer available if the course is taken over by the employer.
Employer Loan
An employer may grant his employee a loan of up to EUR 2,600 per year , which is tax and social security-free for the employee. In the case of a higher loan, the difference between the market interest rate and the effective interest rate paid must be taxed. Four percent is then deducted from the usual market interest rate in the calculation. There is a staff discount of EUR 1,080 for bank employees.
Taxing non-cash benefits: The most important rules
The rule of thumb is: Monetary benefits are taxable. But: No rule without exception. Whether a monetary benefit is taxable depends on various factors. And even if the service has to be taxed, it can still be worthwhile.
For an initial overview, we have listed the most important rules for taxing non-cash benefits:
Monthly exemption limit for non-cash
benefits In order for non-cash benefits to remain tax-free, they must not exceed a limit of EUR 50 per month. If this value is exceeded, the entire amount must be fully taxed (difference between an exemption limit and an exemption amount).
1 percent rule for company cars
A company car is often taxed according to the 1 percent rule if it can also be used privately. Alternatively, a logbook can be kept.
Annual discount allowance
If a company offers its employees its own services or products at a discount, this remains tax-free up to an allowance of EUR 1,080 per year. In the calculation, a value reduced by four percent is also used from the original price.
Example: Employees of an electronics manufacturer get a 20 percent discount on their own products. For a purchase worth 5,500 euros, the adjusted value (minus 4 percent) is 5,280 euros. The monetary benefit is 1,056 euros (20 percent of 5,280). It does not have to be taxed because it is within the tax-free allowance.
We have summarized the most frequently asked questions and answers about monetary benefits in our FAQ on monetary benefits.
Calculate monetary benefits: When is it worth it?
The possibilities of a pecuniary benefit are extensive and employees are happy when their own wallets are relieved. However, the following is absolutely essential: You must calculate your monetary benefit and make sure that it really pays off. Consider allowances and the taxes you have to pay on the value. You should be well informed, especially for larger services such as a company car.
Calculate the individual situation carefully and, if in doubt, consult a tax advisor. As a rule, non-cash benefits are a gain, especially for mini-jobbers and part-time workers, because the same rates apply to them as to other employees. In many cases, however, employees also benefit from the monetary advantage if this is not completely tax-free.
On the other hand, a salary increase not only brings a better salary, but also additional contributions to the pension fund. A pecuniary advantage does not affect this.
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