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Holiday work pay and allowances
If an employee is required to work despite a public holiday, they are additionally entitled to holiday work pay. The Federal Fiscal Court (BFG) has now clarified that such holiday work pay cannot be accounted for tax‑free unless it includes an additional allowance for working on a public holiday.
The Ministry of Finance has now published information on this matter. For allowances and surcharges, the income tax law provides special tax benefits in certain circumstances. Surcharges for “Sunday, public‑holiday and night work” are overall up to EUR 400 per month for employees tax‑free. In the past, employers assumed that the holiday work pay itself – like the surcharges – could also be left tax‑free. This interpretation, however, was never applied uniformly.
The Federal Fiscal Court (BFG) has now, contrary to this practice, ruled that the basic hourly wage for work performed on public holidays is not such a tax‑free surcharge. Under “surcharges”, the BFG understands only the additional wage component to the basic pay. With an answer to an enquiry, the Federal Ministry of Finance (BMF) has now also provided clarity on this point.
Holiday work pay is not a tax‑free surcharge
The BMF shares the BFG’s legal view that the so‑called holiday work pay does not constitute a tax‑free surcharge. If additional remuneration is paid for the work actually performed on public holidays, but no further surcharge is included, then no tax‑free surcharge for public‑holiday work exists. This is because the very meaning of the word surcharge, which presupposes an additional wage component, makes clear that the mere fact of Sunday, public‑holiday or night work does not, by itself, render any part of the wage for such work tax‑free. Rather, the type of remuneration must indicate that it actually contains surcharges of the mentioned kind.
A treatment that, according to the earlier interpretation, was tax‑favoured for the remuneration due for work performed on public holidays is therefore only possible until 31 December 2024. From 1 January 2025, this remuneration must be accounted for as taxable; only a separate public‑holiday surcharge may be paid tax‑free.
Conclusion
Genuine surcharges on holiday work pay that exceed the basic hourly wage are tax‑favoured. Such a surcharge must, however, be clearly shown on the payslip.
The Federal Fiscal Court (BFG) has now, contrary to this practice, ruled that the basic hourly wage for work performed on public holidays is not such a tax‑free surcharge. Under “surcharges”, the BFG understands only the additional wage component to the basic pay. With an answer to an enquiry, the Federal Ministry of Finance (BMF) has now also provided clarity on this point.
Holiday work pay is not a tax‑free surcharge
The BMF shares the BFG’s legal view that the so‑called holiday work pay does not constitute a tax‑free surcharge. If additional remuneration is paid for the work actually performed on public holidays, but no further surcharge is included, then no tax‑free surcharge for public‑holiday work exists. This is because the very meaning of the word surcharge, which presupposes an additional wage component, makes clear that the mere fact of Sunday, public‑holiday or night work does not, by itself, render any part of the wage for such work tax‑free. Rather, the type of remuneration must indicate that it actually contains surcharges of the mentioned kind.
A treatment that, according to the earlier interpretation, was tax‑favoured for the remuneration due for work performed on public holidays is therefore only possible until 31 December 2024. From 1 January 2025, this remuneration must be accounted for as taxable; only a separate public‑holiday surcharge may be paid tax‑free.
Conclusion
Genuine surcharges on holiday work pay that exceed the basic hourly wage are tax‑favoured. Such a surcharge must, however, be clearly shown on the payslip.