Changes in 2023 for employers and employees

In addition to a higher employee lump sum, there will be changes in social security law in 2023.

Many of the changes that came into force at the turn of the year in the area of income tax and social security relate to the adjustment of threshold values, contribution rates and other statutory amounts. This also applies to the increase in the midi-job limit and the flat-rate limit for short-term employment. In addition, there are also significant improvements - not only for employees - to the home office allowance and changes to the regulations on the home office (see overview of changes for 2023). In terms of income tax, the changes to the various allowances and the tax rate, which apply to all income tax payers, will also have an impact.

• Employee lump sum: The lump sum for income-related expenses for employees was increased by 200 euros to 1,200 euros last year. For 2023, the lump sum will increase by a further 30 euros to 1,230 euros.

• Midi-job limit: The upper limit of the transitional range for so-called midi jobs will rise from 1,600 euros to 2,000 euros gross per month on January 1, 2023. Within this range, employees' social security contributions will increase on a sliding scale from zero to the full contribution.

• Health insurance: The majority of the more than 57 million members of the statutory health insurance funds will have to dig deeper into their pockets for health insurance in 2023, as the Federal Ministry of Health has set the average additional contribution for 2023 at 1.6 %. This is 0.3 % more than in 2022. Although the health insurance funds can set the additional contribution differently, most health insurance funds raised their additional contribution at the turn of the year, usually based on the increase in the average additional contribution. Together with the regular contribution rate of currently 14.6 %, the average contribution to health insurance is now 16.2 % of gross salary. This is the highest contribution rate since the introduction of statutory health insurance.

• Unemployment Insurance: The regular contribution rate for unemployment insurance is 2.6 %. However, the contribution rate was temporarily reduced to 2.4 % from 2020 to 2022. As this temporary reduction has now expired, the contribution to unemployment insurance will increase by 0.2 % to the old rate of 2.6 % in 2023.

• Insolvency Compensation Levy: The entitlement to insolvency benefit is financed by a levy. Expenditure on insolvency money continues to be lower than expected, meaning that the levy will be reduced to 0.06 % this year after 0.12 % in 2021 and 0.09 % in 2022.

• Notification of incapacity for work: For employees with statutory health insurance, electronic notification of incapacity for work (eAU) will be available from 2023. This involves the doctor transmitting incapacity for work data electronically to the health insurance fund. An eAU is generated from this data, which the employer can then retrieve from the relevant health insurance fund. The eAU contains the name of the employee, the beginning and end of the incapacity for work, the date of issue and a designation as initial or follow-up notification, i.e. essentially the same data as the familiar "yellow slip". At the same time as the introduction of the eAU, the obligation for employees with statutory insurance to submit a sickness certificate in accordance with the Continued Remuneration Act no longer applies. They no longer have to automatically submit a certificate of incapacity for work to their employer.

  

  However, the obligation to inform the employer immediately about the incapacity for work and its expected duration and to have the incapacity for work determined by a doctor on the fourth day at the latest remains in place, unless an earlier date is specified by the employer. For the time being, mini-jobbers in private households and all privately insured employees will continue to use the previous procedure, i.e. the paper certificate of incapacity for work. However, at the start of the electronic reporting procedure, employees with statutory health insurance should also continue to receive a paper certificate of incapacity for work or request this from their doctor so that they have proof of incapacity for work to present to their employer in the event of an incident. The printout of the data that the doctor has sent to the health insurance company is not suitable for passing on to the employer because the diagnosis is also listed there.

• Certificate of employment: From January 1, 2023, employers will be able to send the certificate of employment required for entitlement to benefits to the employment agency electronically. The paper certificate will no longer be required. Employees will receive proof of the data transmitted by the employer from the employment agency. From this date, employers will no longer be obliged to inform employees about the electronic transmission of data.

• Short-term employment: Not least because of the increase in the statutory minimum wage, the salary threshold for the lump-sum taxation option for short-term employment will be raised from 120 euros to 150 euros per working day from 2023. Without this increase, the lump-sum option would otherwise hardly have played a role in practice.

• Riester pension: Various procedural improvements and simplifications have been made to the Riester subsidy. In particular, parents of a small child are treated in the same way as those compulsorily insured in the statutory pension insurance scheme if child-raising periods have not yet been credited in the pension insurance scheme only because an application has not been submitted or has not yet been decided. The prerequisite is that the parent applies for the child-raising periods no later than the day after the child's fourth birthday. In addition, moving to a country outside the EU/EEA will in future only have a detrimental effect on eligibility during the payment phase. In the accumulation phase, on the other hand, there are no longer any special notification obligations or deadlines to be observed if the residence is temporarily relocated to a non-EU/EEA country.

• Early retiree: Previously, pensioners were only able to pursue part-time work without restriction after reaching the regular retirement age. In contrast, early retirement until 2019 only allowed a maximum of €6,300 per year in additional earnings, otherwise there was a risk of a reduction or even loss of pension entitlement. Due to staff shortages caused by the pandemic, the limit was raised to 46,060 euros from 2020 to 2022. Instead of the previously planned return to the old limit, the limit was simply abolished altogether from 2023.

• Reduced earning capacity pension: There will continue to be an additional earnings limit for pensions due to full or partial reduction in earning capacity, albeit with significant improvements. For recipients of a full reduced earning capacity pension, the previous fixed supplementary income limit of 6,300 euros will no longer apply in 2023. Instead, an annual supplementary income limit of three-eighths of 14 times the monthly reference amount will apply, which corresponds to €17,823.75 in 2023. In the case of a pension due to a partial reduction in earning capacity, the supplementary income limit will be twice as high, i.e. €35,647.50 in 2023 instead of the previous fixed amount of €15,989.40. If a higher income was earned in the 15 years prior to the onset of reduced earning capacity, the higher individual limit will continue to apply.

• Employee assessment: The system for determining the salary thresholds for exemption from the obligation to submit an income tax return will be adjusted and will in future refer to the sum of the basic allowance, employee lump sum and special expenses lump sum. This means that in future there will be no need for time-consuming subsequent changes to the income threshold if the basic allowance or the lump sums are adjusted. In addition, many taxpayers with a low annual income will no longer be obliged to submit a tax return. These employees would otherwise have had to submit a tax return simply because of the reimbursement of health and long-term care insurance contributions or because of an income tax allowance, although in most of these cases no income tax is due.