The so-called relax lump sum or relax allowance (Relax Benefits) is an allowance that employers can grant their employees once a year in addition to their regular salary in a tax-optimized manner. It is meant to subsidize a vacation trip or any other form of recreation with the help of the relax allowance.
Circula offers you the possibility of granting your employees a lump sum for relaxation in the form of an employee benefit. Thus, employers can reimburse their employees once a year with a lump sum for the purpose of relaxation. For the employer, this benefit is taxed at a flat rate of 25% and is exempt from social security contributions. For employees, it is exempt from both tax and social security contributions but the flat-rate wage tax can be passed on to the employees. Please note that the amounts are exclusive of church taxes.
❗️Note: Vacation allowance and relax allowance are not the same and may be paid in parallel. They are not mutually exclusive and are both voluntary measures taken by the employer.
How much is the relax allowance?
With the relax allowance you are able to offer your employees an annual allowance in the amount of:
156€ for each employee
104€ additional for spouse
52€ additional for each child
Which employees can be granted the relax allowance?
All employees can receive an allowance for their recreation costs. This benefit is not only available to full-time employees, but also to part-time employees and working students. In principle, employees are not entitled to the lump-sum relax allowance. This benefit is a voluntary measure on the part of the employer.
Frequently asked questions
On what legal background is the relax allowance based?
Paragraph 40 of the Income Tax Act (EStG) on the lump sum wage tax in special cases regulates the relax allowance. Under paragraph 2, sentence 1, number 3 of the EStG, it is stated that the employer may levy wage tax at a flat rate of 25%, insofar as he grants recreational allowances, if these, together with recreational allowances granted earlier in the same calendar year, do not exceed 156.00 € for the employee.
In addition to the allowance of 156.00 €, employers are entitled to an additional 104.00 euros per year for spouses of the employee and an additional 52.00 € per year for each child as a relax allowance. Please note that the amounts are exclusive of church taxes.
As an employer, am I obliged to provide employees with the relax allowance?
No, the relax allowance is a voluntary measure on the part of the employer.
How much is the recreational allowance?
156 € for each employee
104 € additional for spouse
52 € additional for each child
Example: Mr. Zukowski is married and has three children. He goes on vacation with his family for two weeks. A week after his return, he claims his relax allowance via the Circula app. In the following month, Mr. Zukowski receives a one-time reimbursement of 416 € from his employer.
Who can use the relax allowance?
All employees can be granted the relax allowance by the employer. This benefit can be used not only by full-time employees, but also by part-time employees and working students.
Do employees also pay tax on the relax allowance?
No, this benefit is taxed at a flat rate of 25% for employers and is exempt from tax and social security contributions for employees.
Which recreational activities can be subsidized?
Trips and day trips,
Cures or rehabilitation,
recreation days and treatments (wellness stays, massages, swimming pool, amusement park, etc.)
❗️The condition is that a "vacation" was taken at least 5 working days in a row.
Do employees have to have traveled on vacation to be able to use the recreational allowance?
No, the recreational allowance can be used both as an allowance for an all-inclusive trip and for a vacation at home.
Are vacation allowance ("Urlaubsgeld") and the recreation allowance the same thing?
No, vacation allowance and recreational allowance are not the same and may be paid in parallel. They are not mutually exclusive and are both voluntary measures taken by the employer.
Do you still have questions?
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