The BMF’s response to inquiries regarding the 2025 employee bonus has been published.
Inquiry Response: Employee Bonus 2025
The following basic principles for tax exemption can be derived from the extensive and highly case-specific explanations provided by the Ministry of Finance:
- The key requirement is the additional nature of the bonus payment. Payments already granted in the past (with the exception of inflation bonuses 2022/2023 and employee bonuses 2024) cannot therefore be processed tax-free under the “employee bonus 2025” designation.
- The permissible differentiation options are, fortunately, interpreted very broadly; virtually any objectively justifiable business criterion can be used for different designs of the bonus—both in terms of eligibility and amount—for tax purposes.
- Unlike previous regulations, all performance- or success-related differentiations are generally possible and permissible for the 2025 employee bonus, provided they have a business-related context.
- Granting or tiering based on (individual) qualifications or level of remuneration is also possible.
- Particularly burdensome conditions, such as night or weekend work, or difficult working conditions (hazardous tasks, physical strain), likewise allow for different treatment if they permit an objective distinction.
- Differentiations regarding length of employment (e.g., granting only to employees with a certain minimum number of years of service) as well as prorating in cases of mid-year entry or exit or during parental leave are also possible, as was generally to be expected.
- Differentiations in amount based on the extent of employment (prorating for part-time work) are likewise permissible.
- With reference to margin number 76 of the Wage Tax Guidelines, the Ministry of Finance explicitly clarifies that the hierarchical level in terms of responsibility for the company (management versus other staff, e.g., senior employees, authorized signatories) may be used as a distinguishing criterion if the respective criteria are objectively comprehensible.
- By contrast, unequal treatment based on age, social criteria (e.g., single earners, number of children, etc.), high living costs at the location, or the distance between home and workplace is detrimental: in each case, the required business-related context is lacking.
| Note: In its inquiry response, the BMF explicitly takes the view that, from a tax perspective, it is permissible to exclude marginally employed persons from the 2025 employee bonus. However, it should be noted that such an exclusion would constitute an impermissible part-time discrimination under labor law (see § 19d (6) of the Working Time Act). In other words: While excluding marginally employed persons does not pose any tax issues, the excluded employees would have a labor law claim for back payment, which in turn could have social security implications (loss of marginal employment status). |
Since the current statutory regulation applies exclusively to the calendar year 2025, tax-free employee bonuses pursuant to § 77 (5) and § 79 (2) of the Income Tax Act can still be paid out until February 15, 2026 at the latest (rolled into the year 2025).
Additional note: Whether there will also be a (tax-free) employee bonus in 2026 remains to be seen. The Federal Minister of Finance has the statutory mandate to evaluate the budgetary impact and the effectiveness of the wage tax exemption in connection with the employee bonus by April 30, 2026 and, based on the results of this evaluation, to prepare a legislative proposal for employee bonuses 2026 by May 31, 2026 (cf. § 124b item 478 lit. e of the Income Tax Act).