German Business Calls For Tax-Free Worker Bonuses

by Ulrika Lomas, Tax-News.com, Brussels

26 November 2010

In view of the economic upturn, President of the German association for small- and medium-sized businesses (der Bundesverband mittelständische Wirtschaft – BVMW) Mario Ohoven has urged companies in Germany, where possible, to issue additional Christmas bonus payments to their employees as a reward for their contributions, while at the same time underlining the need for these bonus payments to be tax free.

Defending the idea of a one-off Christmas ‘upturn’ bonus payment, BVMW President Ohoven noted that may sectors in Germany have this year benefited from a significant economic recovery and are therefore able to afford an additional Christmas bonus to reward staff. Ohoven nevertheless emphasized the fact that individual employers must themselves determine whether or not such an additional bonus payment is feasible.

Underlining the fact that employees in Germany have, as a result of their hard work and efforts, contributed to the economic upswing, and are therefore deserving of financial recognition, Ohoven also alluded to the various economic reasons in support of the idea, arguing that issuing extra Christmas bonuses not only serves to boost consumption but also to strengthen growth and to secure recovery. However, any additional bonus payment should, Ohoven warned, be made tax-free by the government. This is only fair, Ohoven added, as the state already significantly benefits from regular Christmas payments.

In stark contrast to the plea for companies to voluntarily issue additional Christmas bonuses, Ohoven rejected calls for wage increases across the board, warning that not all sectors of the economy have fared well during the crisis, and that the global economic climate is far from stable. Global financial market risks could yet plunge the German economy into the next crisis, Ohoven concluded.

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