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Transit passes, childcare and health: the earmarked employer contributions
The module’s worked examples, then cases to attempt before revealing their solution · 1 section · 243 words · 2 min
Practical case
Exempt or taxed at a flat rate?
An employee travels by regional train on 210 working days a year to her first place of work, 30 kilometres away. On top of her salary the employer pays her an allowance of 63 euro a month towards her season ticket. What commuting allowance does she keep if the allowance stays exempt under number 15, and what if the employer taxes it at a flat 25 percent? What does the second option cost the employer?
Hint: First work out the full allowance and check the annual cap. Then ask, for each option, whether the employer's allowance is set against it.
Show the solution
The full commuting allowance is 30 kilometres times 0.38 euro times 210 days, which is 2,394 euro; the 4,500 euro cap is not reached. The employer allowance comes to 63 euro times 12, or 756 euro a year. If it stays exempt under number 15, it reduces the commuting allowance under sentence 3: 2,394 minus 756 leaves 1,638 euro. If the employer taxes it at a flat rate under § 40(2) sentence 2 no. 2, the reduction does not apply, and the employee keeps 2,394 euro. The flat-rate tax is 25 percent of 756 euro, which is 189 euro, borne by the employer. Whether the higher allowance actually lowers her tax depends on the comparison with the employee lump sum.
Answer: Exempt: 1,638 € allowance; flat rate: 2,394 € allowance and 189 € flat-rate tax for the employer
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