Benefits in kind and tax-free allowances: how companies can use tax advantages

Employers

Benefits in kind are a popular way to offer employees extra benefits on top of their salary. They motivate, increase satisfaction and, when set up correctly, are tax-efficient for both sides. But what do companies need to watch out for to get the full benefit of benefits in kind and tax-free allowances? This blog post gives you the key information.

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Veröffentlicht am: 29.04.2025

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Contents

What are benefits in kind?

Benefits in kind (Sachbezüge) are benefits that an employer grants its employees on top of their salary. Instead of money, employees receive goods, services or other non-cash benefits. Examples include:

Vouchers (e.g. for supermarkets or online shops)
Company cars for private use
Job tickets for local public transport
Canteen meals
Employee mobile phones or laptops

Benefits like these can help retain employees. They can also bring tax advantages, provided certain rules are followed.

Which tax-free allowances apply to benefits in kind?

Monthly allowance for benefits in kind Companies can grant benefits in kind of up to €50 a month per employee tax-free. Important: this amount must not be exceeded, not even by a few cents.
Small gifts and presents Gifts in kind of up to €60 per year for personal occasions (e.g. birthdays or weddings) are tax-free.
Job tickets A subsidy for a job ticket, or covering its full cost, is tax-free if the ticket is used for the commute. The tax benefits then also apply to private journeys.
Workplace health promotion Health promotion measures can be reimbursed tax-free up to €600 per year.
Company pension scheme (bAV) Contributions to a company pension scheme (betriebliche Altersvorsorge) are free of tax and social security contributions up to an annual maximum.

What companies should watch out for

Stick exactly to the allowances Even a small excess can make the entire amount subject to tax and social security contributions. Careful documentation is therefore essential.
No cash payments As the name suggests, benefits in kind must be granted as goods, services or other non-cash benefits. Cash payments do not fall under the allowances.
Correct entry in payroll Benefits in kind must be shown correctly in payroll. Follow the current legal rules to avoid mistakes and back payments after a tax audit.
Check the legal situation regularly The allowances and conditions for benefits in kind can change. Companies should keep up to date with the current rules to avoid tax risks.

Conclusion

Benefits in kind and tax-free allowances are an excellent way to reward employees while taking advantage of tax benefits. Getting it right, however, takes care and solid know-how. With a clear strategy and the right support, you can make full use of the advantages and stay on the safe side legally. Both your employees and your company benefit!

Sources

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Benefits in kind and tax-free allowances: how companies can use tax advantages

What are benefits in kind?

Which tax-free allowances apply to benefits in kind?

What companies should watch out for

Conclusion

Sources

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