Einkommensteuer | Inflation compensation premium to compensate for overtime (BVL)
The tax and social security-free inflation compensation premium can be used to compensate for overtime. The Federal Association of Income Tax Assistance Associations (BVL) draws attention to this.
background: Sometimes it happens that employees have to work overtime, which is not paid, but only compensated with additional time off. Due to inflation, last year the legislature created the possibility for employers to support their employees financially by paying them an inflation compensation premium. This is tax- and social security-free and therefore reaches the employee in full.
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) it can be used to compensate employees for the corresponding overtime hours free of tax and social security contributions.
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“In times of rising prices, it should be more attractive for many employees to receive money for the overtime worked instead of time off in lieu,” explains Erich Nöll, lawyer and managing director of the Federal Association of Wage Tax Assistance Associations (BVL) in Berlin.
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It is up to the employer whether or not to use the tax-free inflation compensation premium for this purpose. The employee has no legal right to this.
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Nöll advises: “Employees should speak to their boss about the possibility of overtime pay with the tax and social security-free inflation compensation premium, because ultimately both sides benefit. The employee has more money in his pocket and the employer can control the amount of the inflation compensation premium according to the commitment of his employees.
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If overtime is paid regularly or if its payment is contractually agreed from the outset – also as an alternative to time off in lieu – the inflation compensation premium cannot be used because it is then not paid by the employer in addition to the wages that are already owed.
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NWB OAAAJ-36477