Late lump-sum taxation can lead to obligation to pay contributions

If the actual lump-sum taxation of employee benefits does not take place promptly after payroll accounting, the exemption from social security contributions for these benefits no longer applies.

In many cases, employer benefits taxed at a flat rate are exempt from the obligation to pay social security contributions. However, the lump-sum taxation must take place promptly, as one company had to painfully learn at the Federal Social Court. According to the Social Security Remuneration Ordinance, which was amended in 2015, the mere possibility of lump-sum taxation is no longer sufficient for exemption from contributions. The lump-sum taxation must actually be carried out with the payroll, as the court confirmed.

The case in dispute concerned benefits in connection with a company event that exceeded the allowance of EUR 110 per employee. The event took place in September 2015, but the employer did not make the lump-sum taxation until March 2016, i.e. at a time when the pay slips for September 2015 could no longer be changed for social security and tax purposes. Due to this delayed lump-sum taxation, the company now had to pay contributions and levies of around 60,000 euros on the benefits taxed as a lump sum.