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Tax-free inflation bonus: Up to 3,000 euros for German employees

Work in GermanyInflation bonus for employees. Is the inflation bonus a right for all employees? The bonus payment is required to be paid by December 31, 2024. Unlike the Christmas bonus, the tax-free inflation bonus can amount to up to EUR 3,000. This unique allowance aims to ease the financial strain on employees, particularly with the surge in energy and food prices. The employer holds the responsibility for deciding to pay the bonus, but if they choose to do so, they must extend it to all employees within the company. Does this obligation also extend to individuals employed on a fixed-term basis?

Inflation bonus for employees in Germany

The 2022-adopted third aid package aims to provide urgent support to citizens and tackle high inflation, including a tax-free inflation bonus of up to EUR 3,000. Regrettably, not all employees will benefit from this additional financial assistance. Both full-time and part-time employees, including those on Minijob contracts, are eligible to receive it. However, the actual disbursement is contingent upon the employer’s discretion.

The payment can be a lump sum or split into multiple instalments, with the EUR 3,000 amount being freely divisible. The employer has flexibility in determining the specific amounts, as long as it does not exceed the total of EUR 3,000.
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Initiated at the end of October 2022, payments can continue until December 31, 2024. Those who did not receive it in the current year may anticipate receiving the payment in the subsequent year. Importantly, the inflation bonus does not need to be reported on the tax return and does not impact the tax rate. Furthermore, it cannot be part of the Christmas allowance, as these are distinct payments.

Will all employees receive the inflation bonus?

The employer holds the decision to pay the bonus, and if they choose to do so, they must extend it to all individuals employed within the company. Importantly, the bonus is not contingent upon an active employment relationship. Consequently, as soon as the company decides to pay the inflation bonus, individuals on parental leave, sick leave, or receiving sickness benefits are also receive it. However, the eligibility of fixed-term employees for the inflation premium is not explicitly specified.
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The following persons are entitled to an inflation bonus of up to EUR 3,000:

  • Full-time or part-time employees,
  • Short-term workers,
  • Employees employed on Minijob,
  • Temporary workers employed in agriculture and forestry,
  • Interns,
  • Employees doing paid internships,
  • Short-time workers (Kurzarbeit),
  • Employees on parental leave (Elternzeit),
  • Employees receiving sickness benefits,
  • Volunteers within the meaning of § 2 of the Federal Volunteer Act and volunteers within the meaning of § 2 of the Youth Volunteer Act,
  • Disabled people working in a workshop for disabled people,
  • People receiving pre-retirement benefits,
  • Pension recipients.
Full-time and part-time employees are eligible to receive the bonus
Both full-time and part-time employees are eligible to receive the bonus

Inflation bonus for fixed-term employees

As mentioned earlier, the deadline for disbursing the inflation premium is December 31, 2024. While voluntary, employers choosing to provide it must extend the benefit to all employees within the company. In the case of fixed-term employees, a ruling from the Labor Court in Stuttgart (Case No. 3 Ca 2713/23), as reported by “,” clarifies that individuals employed for a fixed period cannot be treated differently from those employed indefinitely. This suggests that fixed-term employees are entitled to receive the inflation premium on par with their permanent counterparts.