Tax-free §3 No. 34 EStG

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What is applicable under § 3 No. 34 EStG?

Please note: This article is primarily relevant for companies located in Germany, as it specifically takes under consideration the German income tax and health insurance regulations.

According to the German Federal Ministry of Health (BMG), services for the prevention and reduction of illness risks and for the promotion of health in companies that

  • meet the requirements of §§ 20 and 20b of the Fifth Book of the Social Security Code with regard to quality, purpose limitation, targeting and certification, and
  • are provided by the employer in addition to the wages that are owed anyway,

are tax-free, insofar as they do not exceed 600 euros per calendar year.

The 600 euros mentioned here are a so-called tax allowance, not a tax exemption limit. Only the part of benefits exceeding EUR 600 is subject to tax and social security contributions.

Good to know: The benefits of §§ 20 and 20b SGB V apply to all employees, including low-income earners (mini-jobs) and partners or shareholders.

Evermood is a service which is predominantly in the company’s own self-interest.

Therefore the following applies:

  • If the employer doesn’t receive a subsidy from health insurance providers or other benefactors, he doesn’t have to pay VAT himself. The input tax deduction remains in full.
  • If the employer does receive a subsidy from health insurance providers or other benefactors, the employer must pay VAT on the subsidy, as this constitutes a third-party payment.

Accounting record for Evermood with DATEV

In Short

Evermood is posted to the account “Voluntary social benefits not subject to wage tax” 4140 (SKR 03) or 6130 (SKR 04).

Legal basis

The tax exemption of §3 No. 34 EStG refers to the wage tax law, but not to the VAT law. The tax exemption also means that expenses for corporate health services are not considered compensation for work. Therefore, such measures are exempt from social security contributions. However, employers are obligated to keep records of these benefits. Consequently, Evermood must be posted to the payroll account as a tax-free withdrawal.

Good to know: Evermood is not charged against the monthly non-monetary remuneration exemption limit of EUR 44 (§ 8 para. 2 sentence 9 EStG), as this only covers remuneration subject to income tax.

Exemplary accounting record for Evermood with DATEV

Accounting record for Evermood with DATEV​ under §3 Nr 34 EStG

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