Lohnsteuer
Applicable wage tax table for temporary employment in Germany – 2nd update
On 26 February 2024, following discussions with the supreme tax authorities of the federal states, the Federal Ministry of Finance (BMF) responded in a letter to the submission of eight leading associations of the German economy to clarify implementation issues regarding the daily wage tax table to be applied since 1 January 2023 in accordance with R 39b.5 para. 2 sentence 4 Wage Tax Guidelines (LStR).
Problem definition and new input
With the new version of the Wage Tax Guidelines 2023 (LStR 2023), the application of the so-called daily wage tax table for employees who receive tax-free wages in Germany in accordance with Double Tax Treaties (DTTs) or who only work in Germany on a daily basis was laid down in R 39b.5 para. 2 sentence 4 LStR.
For the basic topic, please refer to Newsletter 1, January 2023 and Newsletter 1, January 2024.
In a new submission by the eight associations dated 18 January 2024, five points in particular are addressed that the associations believe still need to be adjusted. To this, the BMF essentially provided the following response:
From Stefan Sperandio, Johanna Wolter and Simeon Wahl
Tax consideration of extra-mandatory employer contributions to a Swiss public-law pension fund
With the ruling of 12.10.2023 VI R 46/20 the Federal Fiscal Court (BFH) follows the opinion of the tax authorities that extra-mandatory employer contributions to a Swiss public pension fund constitute wages that are accrued at the time the contribution is made. Employer contributions to the Swiss extra-mandatory scheme are therefore not tax-free future pension benefits within the meaning of Section 3 no. 62 sentence 1 German Income Tax Act (EStG).
Special features of the Swiss pension system
Pension provision in Germany is structured according to a three-tier principle (statutory pension insurance, company pension and private pension provision). The Swiss pension system consists of three comparable elements, known as pillars:
- State pension scheme (1st pillar, mandatory)
- Occupational benefit scheme (2nd pillar, mandatory between the entry threshold and the upper limit)
- Private pension provision (3rd pillar, voluntary)
Insurance contributions to the Swiss 1st or 3rd pillar are generally viewed as contributions to German pension insurance or private pension provision for tax purposes in Germany.
Within the 2nd pillar, a distinction is made between the following two pension components: the statutory minimum insurance "the mandatory scheme" and "the extra-mandatory scheme". Under the mandatory scheme, the salary components of Swiss employees are taken into account up to a limit defined annually. The part of the salary above the limit is insured under the extra-mandatory scheme. While the mandatory scheme is comparable to contributions to German statutory pension insurance, as the contribution payments are based on a legal obligation, this is not the case with the extra-mandatory scheme. This is because the employer is not legally obliged to make extra-mandatory contributions to the occupational pension scheme but is only obliged to do so under private law.
From Stefan Sperandio, Anne Dechow and Katsiaryna Khramykh
Wage tax classification of winnings from a company raffle event
In its decree dated 10 November 2023 (FSen Berlin, Erl. v. 10.11.2023 - III B-S 2143-1/2009-1), the Berlin Senate Department of Finance lists the tax treatment of non-cash prizes from a company raffle event as business income for the non-taxable participation in a company raffle event in the case of paid ticket purchases.
Based on the decree, it will be examined whether this can be used to derive wage tax classification of winnings from company raffles. This as in the case of company raffles, the question arises whether any raffle prizes constitute remuneration for employees.
In-house raffle events
The granting of a mere chance to win does not already lead to an inflow of wages. On the other hand, employee winnings from a company-internal raffle can, under certain conditions, be classified as a non-cash benefit and therefore as taxable wages.
From Stefan Sperandio, Johanna Wolter, Simeon Wahl and Gurkaran Singh
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