Applicable income tax table for temporary employment in Germany - 3rd update
On 8 October 2024, the Federal Ministry of Finance (BMF) published a new letter (IV C 5 - S 2367/23/10001 :001), on the determination of tax-free and taxable wages in accordance with double taxation agreements and the foreign activity decree in the wage tax deduction procedure. This letter replaces the previous letter of the German Ministry of Finance dated 14 March 2017 (IV C 5 - S 2369/10/10002) and is to be applied for all wage payment periods after 31 December 2024.
Allocation of wages - the most important changes:
The publication of the new letter of the German Ministry of Finance confirms the administrative opinion already set out in the amended German Wage Tax Guideline R 39b.5 para. 2 sentences 3 and 4 German Wage Tax Guideline and notes H 39b.5 as well as the letter of the German Ministry of Finance dated 12 December 2023 (IV B 2 - S 1300/21/10024 :005) on the allocation of wages and application of the daily table in the wage tax deduction procedure, and the amended summary examples are made clear and the previous contradiction between the new guideline and the previous letter of the German Ministry of Finance dated 14 March 2017 is cancelled.
Consequently, the remaining wages that cannot be directly allocated must generally be divided according to the number of days actually worked (if applicable) within a vesting period.
By Stefan Sperandio, Johanna Wolter, Sabrina K. Schweizer and Gurkaran Singh
© 2017 - 2024 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
Follow us
