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Details of the new tax‑free employee premium
The Budget Support Act 2025 introduced a new tax‑free employee premium of EUR 1,000 per year for 2025. Differences compared with previous premiums must be taken into account.
The new employee premium for the year 2025 includes allowances and bonus payments that the employer grants to an employee or to several employees for factual, business‑related reasons, where they constitute additional payments that are not usually granted. Payments that are contractually agreed or that have regularly occurred cannot be made tax‑free under the employee premium. A corona premium, inflation premium or employee premium paid in previous years does not constitute an obstacle to the payment of the new employee premium.
Scope of application expanded
Compared with similar predecessor models, the payment does not have to be based on a wage‑setting provision (collective agreement or corresponding works council agreement), which significantly broadens the scope of application and reduces formalities. In addition, when granting the employee premium no group characteristic (factual differentiation such as employee, worker and apprentice, length of service or distance between workplace and residence) is required. Therefore the new employee premium can be granted to individual employees only, without them forming a group.
If the premium is not offered to all employees or not offered to all to the same extent, the distinction must nevertheless be justified on business grounds and factually substantiated. What exactly constitutes a factual, business‑related justification is still unclear. It is, however, expected that reasons such as increased workload due to a project or sharply rising mobility costs will be regarded as justified.
Does not increase the annual sixth
The tax exemption can be utilised up to an amount of maximum EUR 1,000 per employee per year. An exemption from payroll taxes and social‑insurance contributions is not provided for. Consequently the employee premium is exempt from income tax only. The new employee premium does not increase the annual sixth and is not taken into account for the annual sixth. Employers are free to pay the employee premium in one lump sum or in instalments. It is still unclear whether, in the case of a non‑monthly payment, the premium will be regarded by the ÖGK as a special payment.
The employee premium is subject to assessment and wage tax for employees if it exceeds EUR 1,000 per year, for example because it is granted by several employers. If employees also receive an employee profit participation, the employee premium remains tax‑free provided that the two payments do not exceed a total amount of EUR 3,000.
Example: An employee receives an employee profit participation of EUR 2,000 and an employee premium of EUR 1,000. The two bonus payments do not exceed EUR 3,000 and are therefore tax‑free.
Scope of application expanded
Compared with similar predecessor models, the payment does not have to be based on a wage‑setting provision (collective agreement or corresponding works council agreement), which significantly broadens the scope of application and reduces formalities. In addition, when granting the employee premium no group characteristic (factual differentiation such as employee, worker and apprentice, length of service or distance between workplace and residence) is required. Therefore the new employee premium can be granted to individual employees only, without them forming a group.
If the premium is not offered to all employees or not offered to all to the same extent, the distinction must nevertheless be justified on business grounds and factually substantiated. What exactly constitutes a factual, business‑related justification is still unclear. It is, however, expected that reasons such as increased workload due to a project or sharply rising mobility costs will be regarded as justified.
Does not increase the annual sixth
The tax exemption can be utilised up to an amount of maximum EUR 1,000 per employee per year. An exemption from payroll taxes and social‑insurance contributions is not provided for. Consequently the employee premium is exempt from income tax only. The new employee premium does not increase the annual sixth and is not taken into account for the annual sixth. Employers are free to pay the employee premium in one lump sum or in instalments. It is still unclear whether, in the case of a non‑monthly payment, the premium will be regarded by the ÖGK as a special payment.
The employee premium is subject to assessment and wage tax for employees if it exceeds EUR 1,000 per year, for example because it is granted by several employers. If employees also receive an employee profit participation, the employee premium remains tax‑free provided that the two payments do not exceed a total amount of EUR 3,000.
Example: An employee receives an employee profit participation of EUR 2,000 and an employee premium of EUR 1,000. The two bonus payments do not exceed EUR 3,000 and are therefore tax‑free.