Details of the energy price flat rate

All employed persons are to receive a one-time energy price allowance of 300 euros this year, which will be paid out via payroll or income tax.

As part of the German government's second relief package, all employed persons are to receive a one-off energy price allowance of 300 euros from the state. To implement this, 11 new paragraphs are to be added to the Income Tax Act to regulate who receives the lump sum and how it is to be paid out to recipients.

• Height: The flat-rate energy allowance amounts to 300 euros. However, the amount is subject to tax, so the full amount ultimately only accrues to taxpayers whose income does not exceed the basic allowance. High earners, who are also subject to church tax, receive only about half of the amount after deduction of taxes. However, no social security contributions are due if the employer pays out the amount because it is not remuneration for work.

• Eligibility: The lump sum is primarily intended to compensate for the drastic increase in work-related commuting expenses. For this reason, entitlement to the flat-rate energy allowance is limited to gainfully employed persons who generate income in 2022 as employees, freelancers, or from a commercial enterprise or an agricultural or forestry business. Beneficiary employees also include mini-jobbers taxed at a flat rate and Bufdis (volunteers as part of the Federal Volunteer Service). On the other hand, taxpayers without residence or habitual abode in Germany, in particular cross-border commuters with limited tax liability, do not receive the flat-rate energy tax. Pensioners and retirees who do not have any additional income from gainful employment also do not receive the lump-sum energy price allowance. Nor are recipients of exclusively other income entitled to the lump-sum energy price allowance, for example members of the state parliament, the Bundestag or the EU.

• Disbursement methods: Entitlement to the energy price lump sum will arise on September 1, 2022. The largest group of eligible persons will then receive timely relief via a payment by their employer or by a reduction in their advance income tax payments, without having to take any action themselves. All other eligible taxpayers, for example employees for whom there is no employment relationship on September 1, 2022, will receive the lump sum from the tax office as part of their income tax assessment for 2022 when they file an income tax return for 2022 in the coming year.

  

• Payment by the employer: According to the current plans, the employer is to pay the flat-rate energy tax with the payroll for September to employees who are in a first employment relationship (tax classes 1 to 5) with the employer on September 1, 2022, or who receive flat-rate taxed wages as mini-jobbers. For mini-jobbers taxed at a flat rate, the employer must document that this is a first employment relationship by means of a written declaration by the employee. The flat-rate energy tax is not paid via the employer if the employer does not file a wage tax return, for example, in the case of marginal employment in a private household. In this case, employees can receive the flat-rate energy allowance by filing an income tax return.

  For refinancing purposes, employers are to take the paid flat-rate energy allowance from the withheld wage tax and deduct it from the next wage tax return. If the total energy price lump sum to be granted exceeds the wage tax to be withheld, the employer shall be reimbursed for the excess amount by the tax office to which the wage tax is to be withheld. The employer must document the payment of the flat-rate energy allowance in the electronic wage tax certificate by entering the capital letter E. The tax office is thus given the opportunity to deduct the tax from the wages. This enables the tax office to identify possible double payments (payment via the employer and additional reduction of the advance income tax payment) in the income tax assessment.

• Reduction of the advance payment: Freelancers, tradespeople, and farmers and foresters will receive the lump sum by having their advance income tax payment reduced. To this end, the advance payment for the third quarter of 2022 due on September 10, 2022 will be reduced by 300 euros for each eligible person. For taxpayers whose advance payment on September 10, 2022 is less than 300 euros, the advance payment will be reduced to 0 euros. However, there will be no refund of the balance of the advance payment. There is also no reduction in the advance income tax payment for December 10, 2022. Only in the context of the tax assessment for 2022 will these taxpayers then receive any remaining amount. However, even those who receive the full lump sum credited against the advance payment have not yet received the correct amount, because the lump sum is taxable, but no pro rata tax deduction for the lump sum is yet taken into account when reducing the advance payment. These taxpayers will therefore have to make an additional payment in the 2022 tax assessment because the advance payments were initially reduced by too much.

• Tax assessment: If the eligibility requirements for the energy price lump sum are met, the lump sum is determined ex officio with the income tax assessment for 2022. A special application is not required. In the case of employees, the lump-sum energy allowance is only determined if it has not yet been paid out by the employer. Duplicate consideration of the energy price flat rate in the wage tax deduction procedure and the advance payment procedure will also be corrected in the income tax assessment.

  Regardless of whether the flat-rate energy tax is now determined or has already been paid out, the flat-rate tax increases the taxable income. The only exception to this is the payment to mini-jobbers taxed at a flat rate, for whom the tax authorities waive taxation of the energy price flat rate for reasons of simplification and to avoid possible interactions. If a taxpayer's income consists of several types of income, the lump sum primarily increases income from employment. For all other claimants who are not employees, the lump-sum energy price allowance counts as other income, i.e. it cannot be taken into account as business income. This also excludes the possibility of the lump-sum energy fee being subject to trade tax. Separate information in the income tax return is not required for the taxation of the flat-rate energy fee. The lump-sum energy fee determined in the income tax assessment reduces the income tax assessed and is deducted from it. If the flat-rate energy tax is higher than the income tax assessed, a corresponding refund will be made.

• Co-assessment: The flat-rate energy allowance is granted once to each beneficiary. If, in the case of married couples assessed jointly, only one spouse is entitled to the flat-rate energy allowance, it is also granted only once.

• Social benefits: The energy price allowance is not to be included as income for social benefits whose payment is dependent on other income.