Explained: Meal vouchers (Essensmarken) for employees in Germany
Meal vouchers allow employers to provide their employees with a daily lunch allowance. This saves taxes for both employer and employee which eventually increases the employee's net salary.
The daily allowance for meal vouchers in Germany is max. €6.50 (2020) per employee and workday.
For companies, meal vouchers are in part tax-free and in part flat-taxed (at 25%). The tax-free and flat-tax share each differ depending on factors such as meal price and employee contribution per meal.
Digital meal vouchers have a few important benefits over traditional meal vouchers such as wider acceptance, more flexibility and less paperwork.
Germany and lunch at work
Companies around the world provide a broad range of benefits to their employees beyond their monthly salary. Each country is different in terms of employee benefits and while subsidizing lunch at work is very popular in some countries, it’s only about to get started in Germany.
A recent study found out that lunch at work is among the top 5 most requested employee benefits in Germany. Especially a younger generation of employees is looking not only at the financial compensation, but also at the non-financial perks companies have to offer them.
The German financial authorities decided a while ago that if an employer financially contributes to lunch for employees, they are eligible for a tax deduction, which eventually benefits both employees and employers.
3 things you need to know about meal vouchers in Germany
It wouldn’t be Germany if this tax deduction would be easy to understand.
However, we collected three things every company needs to know if they are interested in giving out meal vouchers as a financial contribution to their employees’ lunch at work:
The maximum allowance per employee and workday is €6.50
As of 2020, the maximum allowance for lunch has been increased to €6.50 per workday and employee. This means that if an employee orders a meal and drink for €7.50, the financial contribution by the employer is the full amount of €6.50.
However, if the price for lunch is less than the maximum allowance, only this price will then be covered.
For example, if the maximum allowance is €6.50, but the lunch deal at the restaurant around the corner was only €5.50, then it’s the €5.50 which are covered by the meal voucher.
Calculating the actual tax-rate for companies depends on a few factors
A financial contribution by the employer in the form of meal vouchers is in part tax-free and in part flat-taxed.
For example, if the maximum allowance of €6.50 per meal voucher is redeemed, the tax-free share accounts for €3.10 while the flat-taxed share accounts for €3.40.
The sum of both values represents the value of the meal voucher, which in this case equals again to €6.50.
The tax-free share increases in case the actual lunch price is higher than the provided meal voucher - and vice versa – depending on how much the employee has to contribute themself.
Below is a tax calculator that helps you with the calculation (German)
Wie viel spart ein Unternehmen mit digitalen Essensgutscheinen?
Employees and employers both save on taxes with meal vouchers
Since meal vouchers are a non-financial benefit provided by the employer and due to the support of the German financial authorities, meal vouchers allow to save taxes for both employees and employers.
By providing meal vouchers, employers are able to lower the social security contribution per employee while employees on the other side save on their annual income tax since meal vouchers are a non-financial benefit.
Digital meal vouchers have a couple of major advantages over traditional meal vouchers
Since a few years, digital meal vouchers have become increasingly popular in Germany. Instead of giving out vouchers with an actual value, they instead allow employees to eat wherever they like and get reimbursed by the end of the month.
In general, they have a couple of advantages over traditional meal vouchers:
- They can be used at every restaurant, supermarket, takeaway and delivery service in Germany
- They eliminate all paperwork (receipts can be scanned and submitted via an app)
- They are only relevant for taxation once they are redeemed (as opposed to traditional meal vouchers)
We hope this article has helped you getting a better understanding of how meal vouchers work in Germany, since they have become increasingly popular among employees throughout the last few years.
Are you interested in giving out meal vouchers to your team as an employee benefit?
If you want to know more about meal vouchers and fringe benefits in Germany, please get in touch with our English-speaking team at email@example.com