Germany Provides Tax Exemption for Special Payments to Employees Due to COVID-19

The German Ministry of Finance has announced that special payments for employees due to the COVID-19 pandemic will be exempted from tax and social security contributions. This allows employers to pay grants and subsidies up to EUR 1,500 per employee between 1 March 2020 and 31 December 2020, free from tax and contributions, provided that the special payments are paid in addition to wages owed anyway. Such special payments may be granted in cash or in kind.