Covid Bonus 2021
On 16 December 2021, the Austrian National Council (lower house of parliament) approved not only tax-free Christmas vouchers of up to EUR 365 p.a., but also tax-free COVID-19 bonuses for 2021.
(When the legislation will enter into force has not yet been announced).
Below we provide an overview of the most relevant questions:
What is the upper limit for an additional tax-free COVID-19 bonus for 2021?
Employees may receive tax-free COVID-19 payments of up to max. EUR 3,000 gross for the calendar year 2021.
Which prerequisites need to be fulfilled for a tax-free COVID-19 bonus?
The payments must be additional payments to full employees due to the COVID-19 crisis, which are paid exclusively for this purpose and which normally would not be paid. The employer must document the connection with the COVID-19 crisis (e.g. by entering “Corona bonus 2021” in the wage account).
Allowances and bonus payments that are paid as a reward for existing performance agreements are not covered by the tax relief and shall remain subject to tax.
In which form may a tax-free COVID-19 bonus for 2021 be granted and when does the payment need to be made by?
The prerequisite for tax exemption in the calendar year 2021 is that these COVID-19 bonus payments must be made by February 2022.
Irrespective of whether these are made as allowances in instalments or via a single payment (e.g. Corona bonus), the payments must be completed before the end of February 2022. It is possible to grant vouchers instead of making cash payments.
In the view of the Austrian Ministry of Finance, tax-free COVID-19 bonuses are not subject to any restrictions in relation to specific industries or activities of key workers. Tax-free COVID-19 bonuses can also be granted for periods of short-time working.
The annual sixth will not be increased by tax-free COVID-19 bonuses and these will also not be credited to the annual sixth.
Are tax-free COVID-19 bonuses also exempt from social security contributions?
Will non-wage labour costs be incurred?
If the prerequisites for tax-free COVID-19 bonuses are fulfilled, allowances and bonuses of this kind (e.g. Corona bonus) will remain free of social security contributions and non-wage labour costs.
Neither mandatory social security contributions under the Austrian General Social Security Act (ASVG) nor severance fund contributions will apply.
Likewise, these tax-free payments do not lead to any obligation for the employer to pay the employer contribution to the Family Equalisation Fund (FLAF), the surcharge to the employer contribution, or municipal tax.
