The recreational allowance supports employees and their families when taking vacations or spa treatments. Your company can contribute up to €156 per employee, €104 per spouse, and €52 per child each year. According to § 40 (2) sentence 1 no. 3 of the German Income Tax Act (EStG), the income tax can be levied at a flat rate of 25%, meaning the benefit is not counted as regular taxable wages. At the same time, under § 1 (1) sentences 1 and 2 of the Social Security Remuneration Ordinance (SvEV), recreational allowances are not subject to social security contributions.
Benefits for Your Company
Boost Satisfaction
By granting a recreational allowance, You noticeably increase the satisfaction and wellbeing of Your employees. That’s no coincidence: well-rested people return to their tasks with renewed motivation. Studies show that teams returning from vacation are up to 12% more productive and take significantly fewer sick days – a direct win for Your organization.
Enjoy Financial Advantages
The financial benefit for You is twofold: on the one hand, the allowances can be taxed at a flat rate of just 25% up to the legal maximums, making them exempt from social contributions and helping Your company save on charges. On the other hand, no social security contributions apply to these benefits, since they don’t count as subject-to-contribution wages.
Strengthen Employer Attractiveness
Perhaps most valuable is the effect on Your employer branding: You send a clear message that Your team’s health and work-life balance matter to You. This positions You as a modern, employee-centric employer. In times of skilled labor shortages and fierce competition for talent, family-friendly benefits like these are a strong recruiting argument and help You fill open positions faster.
Foster Employee Retention
The flexibility of the recreational allowance also enables You to respond to individual needs—whether it’s a spa stay, a wellness weekend, or a family trip. This personal appreciation sustainably strengthens emotional ties to Your company. The result: Your team is less likely to switch jobs and their loyalty to Your organization increases noticeably.
Legal Framework
According to § 1 (1) sentences 1 and 2 SvEV, recreational allowances granted in addition to regular salary are exempt from social security contributions, provided they are not recurring compensation components. The flat-rate wage tax of 25% is regulated in § 40 (2) sentence 1 no. 3 EStG. It ensures the benefit is not considered taxable income and is fully settled for tax purposes. The condition is that the annual maximum amounts of €156 (employee), €104 (spouse), and €52 (child) are not exceeded and that the benefit serves the purpose of recreation.
What Can Be Financed with the Recreational Allowance?
The recreational allowance can cover all types of recovery-related expenses, such as accommodation, meals, spa costs, or family outings. Therapeutic and spa treatments, fitness and wellness services, as well as travel expenses for recreational purposes are also eligible. This gives Your employees and their families the freedom to shape their vacations and recovery time in a way that suits them best.
How to Implement the Recreational Allowance
- Define Guidelines: Set internal policies, including limits and reimbursement procedures.
- Communicate Clearly: Inform all employees transparently about eligibility, amounts, and tax treatment.
- Go Digital: Use the HelloBonnie dashboard to automate the benefits and minimize effort and paperwork.
- Ensure Proper Payment: Make sure the allowance is granted in addition to the salary and within legal limits.
- Monitor & Optimize: Regularly review uptake and gather feedback to measure the impact of the initiative.
Outlook: Recreation as a Strategic Success Factor
In a working world where recovery and mental health are becoming increasingly important, the recreational allowance is a small yet powerful tool. It not only boosts the wellbeing and productivity of Your team but also positions Your company as an employee-focused employer that truly cares. Start now with smart benefit solutions and promote long-term satisfaction and loyalty in Your team.
