Energy price flat rate: What employers must do now
As reported in the media, an energy price flat rate ("EPP") has been introduced to cushion the hardship caused by sudden and drastic increases in energy costs. To this end, actively employed persons will receive a one-time taxable but non-contributory EPP of 300 euros in September. In the majority of cases, this payment will be handled through the employer. Employers must make arrangements for this now and usually take the first step with the August pay run.
As an employer, do I have to pay out the EPP to my employees?
Yes, if you employ persons who meet the following criteria:
- are resident or ordinarily resident in Germany (unlimited tax liability)
- are currently in a first employment relationship with you
- are classified in one of the tax classes I to V or receive wages taxed at a flat rate as marginal part-time employees
You must pay the EPP to your employees with their monthly salary.
In particular, you must also take into account short-term and marginal employees ("mini-jobbers"), trainees, working students, students on paid internships, and parents on parental leave or maternity leave.
Note: However, you are only required to pay the EPP to marginally employed persons if the employee confirms to you in writing that their first employment relationship is with you. The tax authorities have provided the following sample text that can be used for this purpose:
"I hereby confirm ......... (employee name) that my employment relationship with ......... (employer name) existing on 1 September 2022 is my first employment relationship (main employment relationship). I am aware that an incorrect declaration may constitute a tax offence or misdemeanour.”
When do I have to take action as an employer and what specifically do I have to do?
In principle, the EPP must be paid in September 2022 with the monthly salary and with the notation of the capital letter "E" for "one-time payment" on the wage tax certificate. This means that the entitlement must already be declared as part of the payroll tax declaration in August 2022. If you have commissioned us with your payroll accounting, you do not need to do anything other than have your employees complete and sign the attached form and send it to us. We will take care of the rest. Otherwise, please contact your payroll service provider or your payroll team to implement the EPP.
If you file your payroll tax return on a quarterly basis, you can pay the EPP in October 2022. If you file your payroll tax return annually, you can waive the payment of the EPP altogether. In this case, employees can receive the EPP by filing their income tax return for the year 2022.
Does wage tax have to be withheld and paid?
Yes, because the EPP is taxable as an additional wage. It is only tax-free for marginally employed persons. However, social security contributions do not have to be paid on the lump sum.
Will I be reimbursed for the EPP as an employer?
Yes, you can deduct the lump sum from the total amount of wage tax to be withheld and deduct it separately when filing your wage tax return. If the total energy price flat rate to be granted to your employees exceeds the total amount of wage tax to be withheld, the excess amount will be reimbursed to you by the tax office.
Do you have any questions or need further information?
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