The new employee bonus – what needs to be considered?

As of 1/1/2024 the new and tax-free “employee bonus” was implemented by the legislator. In contrast to the cost-of-living bonus, the new employee bonus must be fully paid on the basis of a wage-setting regulation. The regulations for the previous cost-of-living bonus have expired with 31/12/2023.

The newly established employee bonus is tax-free up to a maximum of 3,000 euros per year and employee as of 2024, provided that this additional payment is made in full on the basis of a wage-regulating provision in accordance with section 68 para. 5 subsec. 5 or 6 Austrian Income Tax Act (EStG).

Specifically, this means that the payment is tax-free, if one of the following preconditions is met:

• A collective bargaining agreement, which provides a direct entitlement to the employee bonus, is applicable
• The collective bargaining agreement includes an explicit authorisation to conclude a company agreement regarding the payment of the employee bonus
• If the employer is not authorised to negotiate collective bargaining agreements, a company agreement between the employer and the employee representatives (works council) can be concluded
• If there is no works council, a tax-free employee bonus can be regulated by contractual agreements for all employees

The tax-free employee bonus from 2024 must be an additional payment, which previously was not granted. Payments due to performance agreements or recurring bonus payments are not included in this exemption from taxation.

If cost-of-living bonuses were already granted in 2022 and 2023, these tax-free disbursements do not preclude the employee bonus.

If both the employee profit participation and the employee bonus are paid in the calendar year 2024, then these are tax-free to the extent that both payments do not exceed a total of 3,000 euros per year and per employee. If the amount of 3,000 euros is exceeded, a mandatory tax assessment for the employee is required.

The new employee bonus is free of non-wage labour costs (employer contribution, employer contribution surcharge, municipal tax) and free of social security contributions. The employee bonus is to be stated on the payroll account and the payslip.

The employee profit participation introduced in 2022 is to be clearly distinguished from the new employee bonus. The employee profit participation is, if all requirements are met, free of income taxes. However, in contrast to the new employee bonus, non-wage labour costs and social security contributions are to be paid.

The payment of the tax-free employee bonus can be carried out as a one-off payment or in several partial amounts with the current wage/salary.

In the previous collective bargaining agreement negotiations for 2024, the employee bonus was already taken into account in several industries. Therefore, there are already collective bargaining agreements containing the respective regulations for granting an employee bonus (e.g. collective bargaining agreement for employees in travel agencies, collective bargaining agreement for employees in the stone and ceramics industry or collective bargaining agreement for employees in the real estate administration).

If you would like to use the new regulations in your company, please do not hesitate to contact the People and Organisation team for any advice related to interpretation or implementation.