Food subsidies are attractive supplementary payments which employers can use to provide workers with lunch at reduced rates. A tasty benefit that fills stomachs and simultaneously fills the piggy bank with the money both sides save on wage and social tax. Meal allowances are also the only benefit that can be used by everyone equally - since we all have to eat. A delicious lunch break will ultimately increase the mood and productivity of employees after all.
But it's a little more complicated than simply handing out cash to employees or ordering pizza for everyone. As with everything, there are bureaucratic conditions that have to be met. Tax- and duty-free food subsidies are only applicable with an in-house canteen, food vouchers, official restaurant checks and constant catering options.
As with other benefits in kind, employees and employers equally profit from the tax breaks. The most important thing to keep in mind is the official rate for benefits in kind. Don't worry. We will help you understand benefits in kind and food subsidies in Germany and help you save money.
Our food subsidy guide will shed some light on the finance world - That way, you don't have to decipher overly complicated tax documents by the German tax office.
Any kind of additional payment to the salary will be considered a benefit in kind (Sachbezug). There are multiple forms in which such additional bonuses to employees can be granted. Everyone surely dreams of getting a higher salary. Sadly, in reality any raises will always go hand in hand with higher taxes that will eat up a lot of the extra payment. Puff - and (almost) gone is the bonus. That's why benefits in kind can be a more worthwhile alternative for employees.
Does that mean: either; or? Do you have to decide between an employee gift in form of coupons and food subsidies? No! Luckily, food subsidies are a separate benefit and thus are not included in the official tax allowance. The same applies to support for rent, accommodation and presents for special celebrations. Generous employers can use multiple means to increase their employee satisfaction - because happy teams connect more and stay longer.
For more details on benefits in kind click here!
Remunerations and subsidies by the tax office (Finanzamt) are supposed to lower the cost of living of workers to boost productivity. After all, with meal allowances each employee can save 6.67 EUR per meal every workday!
In order for this benefit to be tax and duty-free, three conditions have to be considered in the price calculation:
1. Official rate for benefits in kind: 3.57 EUR per lunch
2. Subvention by the employer: 3.10 EUR
(3. Supplementary payment by the employee)
The official rate for benefits in kind of 3.57 EUR is also the minimum amount of supplementary payment that employees have to spend themselves in order to keep the meal tax-free. If the additional payment by the employees has been made, the entire meal will be tax and duty-free for both employers and employee.
Paying less than this supplementary fee will lead to mandatory taxation of the difference. However, this difference can be subsidized with a lump sum taxation rate of 25% by the company. With this flat tax paid, the social contributions will be dropped, which saves more money in the long run.
With this complicated part out of the way, the subvention by employers is rather simple. A company contribution of 3.10 EUR (for 2021) is completely tax and duty free. Therefore, if subvention and the official benefit in kind are met, both sides will equally save with this meal allowance overall. In total, each employee saves 6.67 EUR per meal and day without additional fees.
As with every bureaucratic matter, there are certain limitations for food subsidies. Generally, only one meal per employee and day can be subsidized. Which mealtime is chosen is completely up to the employers' preferences, though lunch and dinner yield higher remuneration rates. As a general condition, the price of the meal will have to be easily traceable for the financial institute so keeping bills is advised.
Since not everyone eats at the workplace, is sick sometimes or works from home entirely - these special circumstances go hand in hand with special regulations.
To simplify, we'll give you an overview of when food subsidies apply.
only full meals suitable for immediate consumption are eligible (salads, sandwiches, soups, etc.)
For business trips shorter than 3 months, employers cannot offer food subsidy but may give subsistance expenses (Verpflegungsmehraufwand). After 3 months, food subsidy is applicable.
Numbers here rules there and don't you dare forget to have a bill! That's one way to go about it. Another way to document food purchases for subsidy is through apps. For a small fee, apps either include digital food vouchers or can be used to scan receipts. Even easier than apps are delivery services like Smunch that include the tax benefit in their price.
Rather than let this advantage for your employees pass because benefits in kind require effort, Smunch can take this work off your back. With our large variety of daily changing lunch menus that we deliver to teams in offices, keeping track of food subsidy is a breeze. Our food is equal to digital food vouchers, sparing you a paper mess. And with us, you save money and time you can spend enjoying our food! Plus, we'll help implement Smunch into your payroll.
Get in touch with us and we'll help you optimize subsidies.