Especially good bosses do not just pay their employees a salary, they add in additional benefits in kind – sometimes called “vermögenswirksame Leistungen”.
But first things first. Workers in the position of receiving some of their benefits in kind will already know what an Employee Savings Allowance (Arbeitnehmersparzulage) is: here are the details for those who do not know.
What is an Employee Savings Allowance (Arbeitnehmersparzulage)?
The Employee Savings Allowance is a government grant for employers to help with the provision of a savings plan (vermögenswirksame Leistungen) to their employees. It usually takes the form of a little extra money intended to go towards the employee’s savings or capital portfolio. Employers can contribute up to €40 per month.
The Employee Savings Allowance can be used in connection with several different investment methods. A distinction is made between buildings society savings (Beteiligungssparen) and investment savings (Bausparen). Regarding investment savings, everything revolves around equity investments (for example, shares in the company) or equity funds. Building society savings are usually designed to fund property ownership – and in this case, the employee can benefit even more, from the housing premium (Wohnungsbauprämie).
Employee Savings: Investment Participation (Beteiligungssparen)
Beneficiaries enjoy an employee savings bonus of 20%. The maximum contribution from single people is up to €400 and for married couples up to €800. The 20% savings allowance (Arbeitnehmersparzulage) therefore means a benefit to the employee of €80 for singles and €160 for couples.
There is a catch, however. Only employees with less than €20,000 (€40,000 for couples) taxable annual income are eligible for the employee savings bonus (Arbeitnehmersparzulage). This does not include capital income (Kapitaleinkünfte).
Employee Savings: Building Society Participation (Arbeitnehmersparzulage: Bausparen)
Any employee claiming the Employee Savings Allowance (Arbeitnehmersparzulage) in the form of building society savings (Bausparen) enjoys a 9% bonus, up to a maximum total investment of €470 for singles and €940 for couples. This means a maximum bonus of €43 can be claimed by singles and €86 can be claimed by couples.
Again, there is a caveat: the scheme is only open to those whose taxable income does not exceed €17,900 for singles and €35,800 for couples. As with investment savings (Beteiligungssparen), capital income (Kapitaleinkünfte) does not count towards the limits.
Apply for the Employees Savings Allowance (Arbeitnehmersparzulage) at the Tax Office
In order to make an application for the Employee Savings Allowance (Arbeitnehmersparzulage), the employee must submit the correct paperwork: a form called Investment VL (a certificate) must be attached to their annual tax return and submitted to the appropriate tax office. The certificate confirms to the tax office that the employee has the savings plan in place, in accordance with the law VermBG (Vermögensbildungsgesetz). Normally the asset management (the bank, building society and so on) will send the certificate after a year. Failing this, the form can be requested from the tax office.
Note: Please be aware that applications must be received by the tax office no later than four years after the end of the savings year in question.