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The non-cash benefit: information, taxes & tips
March 27, 2025
In addition to the monthly salary, there are other non-cash benefits for employees that can be claimed as soon as you know something about their existence. We would therefore like to introduce the non-cash benefit and explain what it is all about and where you can save money.
What is a non-cash benefit?
Non-cash benefits are generally understood to be remuneration in kind that does not have to be taxed at all or only at a low rate. The best-known non-cash benefits include, for example, company cars and company cell phones. These are often referred to as non-cash benefits or benefits in kind. However, they always mean the same thing, namely remuneration that goes beyond the salary and is not paid out in cash.
More than the classic salary increase
More than the classic salary increase
Monetary benefits are intended as a supplement to the salary, enriching it with goods or services. As an employee, this results in lucrative benefits, some of which are taxable. We explain below what taxation can look like.
But what else is considered a non-cash benefit in addition to the classic company car and company cell phone? If you receive a canteen meal allowance or are given a cheaper apartment, this is already a non-cash benefit.
However, if your employer provides you with goods that were produced in the company itself, either at a lower price or even free of charge, this is referred to as a seconded salary. Only if these goods are not predominantly used to cover your needs will the final price be classified as a non-cash benefit with a reduction of 4%.
How is a non-cash benefit taxed?
In principle, non-cash benefits must be taxed. The allowance is €1,080 per year according to §8 EStG, otherwise the benefits are taxed as normal via the wage tax statement. If you exceed this allowance, you pay tax on the difference.
Please note: This also applies to bonus miles earned on business that are used privately. The monthly exemption limit is €44 if
- gifts for birthdays or anniversaries,
- the monthly pass for the commute to work,
- fuel vouchers,
- additions to KiKa,
- vouchers for magazines,
- SIM cards etc. can be accepted.
If this €44 per month is exceeded, the non-cash benefit must be taxed in full.
For laptops and smartphones, the rule of thumb is that employees can accept these devices as a gift and even use them privately, provided the employer has taxed them at 25% income tax. The same applies if these devices are sold on to employees at a favorable price.
Further training remains tax-free as long as it is directly related to your profession. As long as there is a connection between health and occupational stress, €500 per year can be spent on health measures. These measures include gyms, physiotherapy and massages.
Loans of up to € 2,600 can be granted tax-free or at low interest rates.
The company car and methods of taxation
A popular non-cash benefit is the company car. Regardless of whether you use your company car privately as an employee or as an entrepreneur, the rules for tax treatment are the same in both cases.
You can either opt for a logbook or for the flat-rate 1% rule.
All journeys between the place of work and your own home that are not part of the direct route to work are attributed to private use.
The logbook is definitely more time-consuming to use, but can be worthwhile for more expensive car models, especially if you limit private use. A record must always be kept of the proportion of private and company journeys. And every day. Subsequent entries are not accepted, so you have to be very accurate with this method. This method is worthwhile for those who primarily use the company car for business trips.
The 1% rule is quickly explained in accordance with Section 6 No. 4 EStG: The monthly private use of the vehicle is based on the domestic list price, which is used as remuneration. For example, if the car cost €30,000 (new value and gross), 1%, i.e. €300 per month, may be used for private use, not including the journey to work. Per kilometer, € 0.30 can be claimed in the income tax return.
Tip: There are a number of influencing factors that you should consider before deciding for or against a company car. You should therefore clarify a few important questions in advance.
- How much does your current car cost you per month, including insurance, taxes, leasing, repair costs, etc.?
- Does the employer pay the gasoline pro rata or in full?
- Can you do without your private car completely?
- How important is it to you to have a car for private use?
You should clarify these questions beforehand, as a company car can also have tax disadvantages. So before you decide for or against it, you should obtain more detailed information about your individual case.
Further examples of non-cash benefits
Bonus miles:
If the bonus miles do not exceed the value of $1,080 per year, you may use these miles collected for business purposes privately without paying tax.
Data processing equipment:
You can accept laptops, computers, smartphones, and similar items as gifts or at a reduced price without paying tax. Your employer will pay a flat-rate tax on these items as a monetary benefit and give them to you in addition to your salary.
Meal vouchers & checks:
For up to €3.17 per day, you can redeem restaurant vouchers and coupons for food and drinks.
Further training:
If your employer pays for your further education or training that is directly related to your profession, it is tax-free for you.
Driver's license:
If the costs for the driver’s license are covered by the employer for primarily business reasons, this is considered non-taxable income.
Gifts from your employer:
Smaller gifts are tax-free. The limit of €44 per month must not be exceeded. On special occasions such as birthdays or weddings, the limit of €60 must not be exceeded. If two occasions fall in the same month, the two gifts together may not exceed €60. However, it is not permitted to accumulate the amount, but the €44 may be used up again each month.
Health promotion:
Health promotion: As long as the measures are related to your work-related stress, massages, physiotherapy, and sports activities are tax-free up to €500 per year.
Childcare:
As long as your child is of school age and is not cared for at home, your employer may cover the full costs. This is exempt from both tax and social security contributions.
Parking:
This is also considered a tax-free benefit in kind if you use it during working hours.
Employee discount:
Particularly attractive for retail employees: employers can sell goods at a discount or give them away for free up to a value of €1,080 per year. The same applies to services.
Non-cash benefits up to €44:
These include monthly tickets, fuel vouchers, and merchandise vouchers. The amount can be used each month.
Relocation costs:
The employer may cover all costs associated with job-related relocations.
Interest-bearing loan:
Interest-bearing loan: Your employer can grant you a loan with no interest or at a reduced interest rate of up to €2,600 tax-free.
Tool allowance:
Your employer may compensate you for your own tools, such as hammers, scissors, and screwdrivers. This is tax-free for you.
Benefits in kind:
Please note the point “Non-cash benefits up to €44.”
