The bonus in kind (non-cash bonus) is a modern form of supplementary compensation where employers provide goods or services instead of cash payments. These benefits are particularly attractive because they can be taxed at a flat rate of 30% up to €10,000 per employee per year – offering tax advantages for both employers and employees.
Benefits for Your Company
Tax efficiency and cost advantages
By applying the flat tax rate under § 37b of the German Income Tax Act (EStG), non-cash bonuses are taxed at a fixed rate of 30%. This allows companies to provide valuable benefits without incurring the full additional payroll costs of a salary increase. The favorable tax treatment makes the non-cash bonus a cost-effective tool for employee retention.
Flexibility in benefit design
The non-cash bonus gives employers the ability to tailor benefits to the individual needs of their employees. Whether it's mobility options, health programs, or professional development – the wide range of eligible non-cash benefits allows companies to align incentives with their corporate culture and workforce preferences.
Strengthening employer branding
In a competitive job market, attractive benefits are a key factor in attracting and retaining top talent. The non-cash bonus signals appreciation and innovation, positively impacting the employer brand and enhancing the company’s appeal.
Benefits for Your Employees
Personalized recognition and motivation
Employees value when their efforts and needs are acknowledged on an individual level. The non-cash bonus allows for personalized rewards that match their specific interests, boosting motivation and workplace satisfaction.
Financial advantages without added tax burden
Since the bonuses are taxed at a flat rate, employees don’t incur any additional tax obligations. They receive the full value of the benefit, improving their financial situation and reinforcing their sense of appreciation from the employer.
Versatile applications
Whether for everyday needs, personal development, or leisure activities – the non-cash bonus can be used across a wide range of life situations. This versatility allows employees to make the most of the benefits based on their individual circumstances and preferences.
Legal Framework
Under § 37b EStG, non-cash benefits up to a value of €10,000 per year and employee can be taxed at a flat rate of 30%. These benefits must be provided in addition to the regular salary and cannot be paid out in cash. It is essential that these perks are clearly separated from other salary components and are not used as substitutes for regular compensation.
Conclusion
The bonus in kind is an effective way to provide employees with personalized recognition while benefiting from tax advantages. Thanks to its flexibility and broad range of uses, it strengthens employee retention and fosters a positive company culture. Companies that strategically leverage the non-cash bonus position themselves as attractive employers and make a lasting investment in employee satisfaction and motivation.
