Tax-friendly remuneration: the corona premium

In the context of the wage agreement in which a maximum wage increase of 0.4% above the obligatory indexation was agreed, it was further decided that this may still be supplemented with a 'corona premium'.

The corona premium for employees

The corona premium can be granted by employers to their employees from 1 August 2021 to 31 December 2021. This will be paid in the form of cheques. The cheques will be valid until December 31, 2022.

The granting must be contained in a collective labour agreement concluded at sectoral or company level.  In the absence of a trade union delegation, the granting may also be done in a written individual agreement. The maximum amount that can be granted is EUR 500,00.  It can be spent in the catering, sports and cultural sector as well as in retail stores that have been closed for at least a month.

For social security purposes, the corona premium is not regarded as salary, so that no ordinary social security contributions are due (neither employer nor employee contributions). There is only a special employer's contribution of 16.5%.

For tax purposes, the premium as well as the special employer's contribution can be deducted as professional expense for employers. For employees, it is an exempt social benefit. Therefore, no tax is due. 

The corona premium for self-employed persons 

Self-employed persons can also qualify for a premium if they have received a ‘bridging right’ for 6 months in the period from 1 October 2020 to 30 April 2021. The gross amount is EUR 598,80 and is paid in cash. It can be spent wherever the individual wants. The premium is taxable separately at 16.5%, so that it amounts to EUR 500,00 net. Both companies’ directors as other self-employed persons as well as coworking spouses can benefit from the premium.  Self-employed persons in a secondary occupation are also eligible, provided that the social contributions they pay are as high as those of a self-employed person in main occupation. The premium was automatically paid by the social security funds on 30 September 2021 at the latest, but does not accrue social rights.

Conclusion

The corona premium gives employers an additional opportunity to provide their employees with an extra remuneration in a tax-friendly manner.