Tax treatment of the purchasing power protection bonus (metal industry)

The Federal Ministry of Finance (BMF) recently published a response to a query regarding the purchasing power protection bonus in the metal industry. In summary, the BMF takes the following view on the income tax treatment of the purchasing power protection bonus:

• The purchasing power protection bonus to be paid out with the December 2025 payroll can generally be settled as a tax-free employee bonus in accordance with § 124b (478) of the Income Tax Act (EStG). This also applies if part of the bonus is converted into leisure time entitlement by means of a works agreement or, in companies without a works council, by means of written individual agreements. In this case, the tax exemption for the non-converted part remains in place.
• An essential prerequisite for tax exemption is that the payment is an additional payment that has not normally been granted in the past. Tax exemption would therefore be jeopardized if the company had already been paying bonuses that are now being reduced due to the purchasing power protection bonus. In this context, attention should be paid to the bonus model as a whole and not to the payments made to individual employees.
• Corona bonuses (2020, 2021), inflation bonuses (2022, 2023), and/or an employee bonus granted in 2024 (§ 124b No. 447 EStG) do not preclude a tax-free employee bonus for 2025.
• Please note: If the purchasing power protection bonus is paid out over a period of more than one month, the Federal Ministry of Finance (BMF) considers this to be a hidden salary increase rather than an employee bonus, meaning that it is not tax-exempt.

No official response has yet been received from the ÖGK (Austrian Health Insurance Fund) regarding treatment under social insurance (this is expected in the next few days). However, it appears that it will be classified as a special payment (which would be welcome news for marginal employees). In occupational pension schemes (new severance pay), a purchasing power protection bonus is subject to contributions as normal.

In the area of non-wage labor costs (DB, DZ, KommSt), there is a tax liability unless another exemption applies (e.g., preferential treatment for disabled persons or age-related exemption from 60).