Status: 05.12.2023, 16:05 PM
By: Anne Hund
Have you ever asked your boss for a recovery allowance? It is a voluntary payment by the employer, as experts explain.
In some companies, for example, it is available instead of holiday pay: the so-called recreation allowance. This is a voluntary payment from the employer. In principle, companies can pay their employees such a bonus to support them in their recovery time, so to speak.
Recreation allowance as a voluntary payment from the employer
However, the voluntary payment is then really to be used for recreational purposes – "for example, for a visit to the water park or a holiday", as the Income Tax Assistance Association United Wage Tax Assistance (VLH) describes on its website. Incidentally, some companies also pay the recreation allowance as an alternative to the Christmas bonus or the 13th month's salary. It might be worthwhile to ask your employer.
The money is intended to be used for recreational purposes or for holidays. (Symbolic image) © IMAGO/imageBROKER/Oleksandr Latkun
What to look out for in taxes, according to experts
As a rule, the employer pays tax on the recreation allowance "at a flat rate of 25 percent", as the VLH explains. In addition, that payment is exempt from social security contributions. "In this way, you can enjoy an extra that is completely tax- and social security-free for you." But there is a catch. In the case of flat-rate taxation, the recreation allowance is tax-free for employees "only up to a certain amount per year" and can be taxed by the employer at a flat rate, according to the VLH:
- for singles up to 156 euros per year
- for married couples up to 260 euros per year
- for each child an additional 52 euros per year
Recreation allowance: When does the employee benefit in full?
In other words, singles could get up to 156 euros per year in this way, according to a report by the German Press Agency (dpa). Anyone who is married or lives in a registered civil partnership can receive an additional 104 euros for their partner. And for each child who lives in the household, up to 52 euros are additionally possible.
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If the employer chooses the lump-sum taxation of 25 percent, the employee does not incur any taxes, as dpa also reports. "Another advantage is that the benefit is exempt from social security contributions," says Jana Bauer of the Federal Association of Wage Tax Assistance Associations (BVL), according to the report. In this case, the employee benefits the entire amount.
According to dpa, it is important to know that the payout must not exceed the tax-free amount by one euro - otherwise the money would have to be taxed as wages. However, it can be divided into several transfers.
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What the tax office pays attention to
Employees should confirm the recreation connection to their employers accordingly and confirm, for example, by receipts for an amusement park or a travel booking, as dpa also reports, citing the tax experts. There should be no more than three months between the payout and the recovery period.