What does one-time payment mean

One-time benefits - contribution calculation

Wages are all current or one-off income from employment. One-time wages are benefits that are attributable to wages and are not paid for work in a single payroll accounting period.

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Indicator of one-off benefits

  • In contrast to current wages.
  • One-time benefits are remuneration components that cannot be assigned to a single billing period (month). So you are not paid monthly.
  • The terms one-time payment, special payment, special allowance or one-off wage are also frequently used.
  • Largely corresponds to the wage tax term other payments.
  • The most common one-off benefits are vacation pay, Christmas bonus, bonuses, anniversary benefits and dismissal payments.
  • If the contribution assessment limits are not exceeded, the one-time payment is subject to full contributions.
  • If the current salary is already above the assessment ceiling in the pension insurance, the one-off payment is free of charge.
  • Special features arise if the current wage and the one-off payment together exceed the respective contribution assessment limits.
  • In contrast to the calculation of allocations U1 and U2, one-off wages are used to determine the insolvency allowance allocation.

§ 23a SGB IV - One-time payment as income subject to contributions:

(1) One-time wages are benefits that are attributable to wages and are not paid for work in a single payroll accounting period. Benefits according to sentence 1 do not count as one-time payment if they
  1. usually to compensate for certain expenses of the employee, which are also in connection with the employment,
  2. as goods or services that are not primarily manufactured, sold or provided by the employer for the needs of his employees and that can be used on a monthly basis,
  3. as other benefits in kind that are granted monthly, or
  4. as capital formation benefits
are provided by the employer. One-time wages paid shall be allocated to the payroll accounting period in which it is paid, unless paragraphs 2 and 4 stipulate otherwise.
....

With the 5th SGB IV-AmendmentG dated April 15, 2015, the words "granted monthly" were added to Section 23a (1) sentence 2 number 3 SGB IV after the words "other benefits in kind".
Excerpt from the justification for the draft law:

With the addition of sentence 2 in Section 23a (1), fourth book, of the Second Act for Modern Services on the Labor Market, ongoing benefits of the employer, which are granted as other benefits in kind and taxed at a flat rate, should not be assessed as one-off wages and thus be exempt from contributions. In its judgment of October 31, 2012, the Federal Social Court rightly stated that the legal wording does not reflect the restriction that the benefits must be continuously available. In order to restore the intended legal status, a clarifying addition is made.

Special gifts

  • As of 01/01/2006, birth and marriage allowances are no longer tax and contribution-free (they were only up to € 315). From 01/01/2006 these subsidies are subject to tax and contributions.
  • Support for a justifying cause (e.g. illness or accidents) of up to € 600 per calendar year is tax-free and therefore non-contributory.
  • Employer services to improve the general state of health and company health promotion are tax-free and therefore free of contributions (Section 3 No. 34 EStG). The rule could be applied for the first time in 2008. Requirements from 2019:
    • The benefits are provided by the employer in addition to the wages owed anyway.
    • The services serve to prevent and reduce the risk of illness and to promote health in companies.
    • The amount of € 500 (€ 600 from 2020) per employee and calendar year will not be exceeded.
    • The service meets the requirements of Sections 20 and 20b of the fifth book of the Social Security Code in terms of quality, earmarking, targeting and certification.
    The increase in the tax exemption from 500 euros to 600 euros for company health promotion per employee in the calendar year was determined from the assessment period 2020 and the wage tax deduction in 2020 (Bureaucracy Relief Act III). The Bureaucracy Relief Act III was on the agenda of the 982nd meeting of the Federal Council on November 8, 2019. The Federal Council has approved.
    From 2019, the measures must meet the criteria of the National Association of Health Insurance Funds and be certified accordingly.
    According to the government draft, the new version of Section 3 No. 34 EStG is to be applied for the first time from the 2019 assessment period. In order to adapt the procedures in the companies, the certification of previously uncertified measures will only be required from the 2020 assessment period with the present change. The other requirements of Sections 20 and 20b SGB V must be met beforehand (Bundestag printed matter 19/5595 of November 7, 2018, p. 83).
  • In the Corona crisis, special payments for employees up to an amount of 1,500 euros in the period from March 1, 2020 to June 30, 2021 are exempt from tax and social security.

Special contribution calculation for one-off donations

If the peculiarity mentioned above occurs (wages and one-off payments together above the respective contribution assessment limits), the following procedure applies (Section 23a (3) SGB IV):

  1. Determination of the duration of employment with the AG paying the one-time allowance in the current calendar year up to the end of the wage payment period in which the one-time allowance is paid.
    (= Determination of all the times that have been given contributions and the fact that the times that are not given contributions are excluded)
    This results in the pro-rata annual contribution ceiling.
  2. This is compared with the salary that is subject to contributions for this period of employment.
  3. The one-time grant is subject to the obligation to contribute either in full or up to the difference.

The following 2 examples illustrate the situation.
Example 1 applies to the new federal states.
Example 2 applies to the old federal states.

Differences arise because of the contribution assessment ceiling in pension and unemployment insurance. Pension and unemployment insurance will continue to differentiate between the old and new federal states until 2024.
From January 1, 2025, a uniform contribution assessment ceiling and a uniform reference value will apply in the new and old federal states.


Example 1 - Payment of additional vacation pay (accounting year 2021; new federal states):

  • An AN in the new federal states receives an ongoing salary of € 4,000.00.
  • For the new federal states, the income threshold for pension and unemployment insurance will be € 6,700.00 per month in 2021.
  • In health and long-term care insurance, the national contribution assessment ceiling will be € 4,837.50 per month in 2021.
  • The billing month is April 2021. An additional vacation allowance of € 4,000.00 is paid.
Calculation in pension and unemployment insuranceCalculation stepsResult
pro rata annual earnings ceiling4 * 6.700,00 €26.800,00 €
contributory remuneration4 * 4.000,00 €16.000,00 €
Difference (not yet covered with contributions)26.800,00 € - 16.000,00 €10.800,00 €
Obligation to contribute to vacation payThe vacation pay is subject to full contributions, as the difference is greater.4.000,00 €

 

Calculation in health and long-term care insuranceCalculation stepsResult
pro rata annual earnings ceiling4 * 4.837,50 €19.350,00 €
contributory remuneration4 * 4.000,00 €16.000,00 €
Difference (not yet covered with contributions)19.350,00 € - 16.000,00 €3.350,00 €
Obligation to contribute to vacation payThe vacation pay is only partially subject to contributions, as the difference is smaller.3.350,00 €

The illustration clearly shows that there is much more space up to the income threshold in pension insurance than up to the income threshold in health insurance. This also explains why vacation pay is subject to full contributions in pension and unemployment insurance and only partially subject to contributions in health and long-term care insurance.


Example 2 - Payment of additional vacation pay (accounting year 2021; old federal states):

  • An AN in the old federal states receives an ongoing remuneration of € 4,000.00.
  • For the old federal states, the income threshold for pension and unemployment insurance in 2021 is € 7,100.00 per month.
  • In health and long-term care insurance, the nationwide contribution assessment ceiling in 2021 is € 4,837.50 per month.
  • The billing month is April 2021. An additional vacation allowance of € 4,000.00 is paid.
Calculation in pension and unemployment insurance Calculation steps Result
pro rata annual earnings ceiling4 * 7.100,00 € 28.400,00 €
contributory remuneration4 * 4.000,00 € 16.000,00 €
Difference (not yet covered with contributions)28.400,00 € - 16.000,00 € 12.400,00 €
Obligation to contribute to vacation payThe vacation pay is subject to full contributions, as the difference is greater.4.000,00 €

 

Calculation in health and long-term care insurance Calculation steps Result
pro rata annual earnings ceiling4 * 4.837,50 € 19.350,00 €
contributory remuneration4 * 4.000,00 € 16.000,00 €
Difference (not yet covered with contributions)19.350,00 € - 16.000,00 € 3.350,00 €
Obligation to contribute to vacation payThe vacation pay is only partially subject to contributions, as the difference is smaller. 3.350,00 €

The illustration clearly shows that there is much more space up to the income threshold in pension insurance than up to the income threshold in health insurance. The vacation pay and the current wages together only barely exceed the assessment ceiling in the pension and unemployment insurance. This also explains why vacation pay is subject to full contributions in pension and unemployment insurance and only partially subject to contributions in health and long-term care insurance.

Calculation examples for 2011
Calculation examples for 2012
Calculation examples for 2013
Calculation examples for 2014
Calculation examples for 2015
Calculation examples for 2016
Calculation examples for 2017
Calculation examples for 2018
Calculation examples for 2019
Calculation examples for 2020


Time allocation of the one-off benefits - March clause

The obligation to contribute could be circumvented if one-off benefits are always paid in January.
This is where the so-called March clause applies (Section 23a, Paragraph 4, SGB IV).

After that, one-off payments made in the period from 1.1. until 31.3. are added to the last payroll accounting period of the previous year if they are paid by the employer of this payroll accounting period and the pro rata annual income limit is exceeded.
If the allocation is made to the previous year, the provisions of the previous year (contribution rates, contribution assessment ceilings) are to be used as the basis for calculating the contributions.
The allocation is generally made in all branches of insurance (also for the insolvency levy). Accident insurance is an exception. The March clause does not apply to accident insurance; here only the inflow principle applies. Since December 1, 2011, separate submission reason 91 has to be used for accident insurance in order to report one-off wages paid, which are only subject to contributions and notifiable to accident insurance, with the notification to social insurance.
With the repeal of Section 11 (4) DEÜV (5th SGB IV-AmendmentG), reason 91 (special notification of one-off wages for accident insurance) will be deleted from 01.01.2016 The description of the reason for submission 54 (notification of one-off wages paid) is again provided without the addition to accident insurance.

For employees who are subject to health insurance, the assessment ceiling of the health insurance is always decisive. For employees who are not covered by health insurance, the assessment ceiling of the pension insurance is always decisive.

One-time benefits, which from 1.1. until 31.3. must always be assigned to the previous year if no current wages have been incurred in the current calendar year (e.g. due to sickness benefit).

If the payment is made after 03/31 occurs and there is no payroll accounting period in the current year, the payment is free of charge (e.g. the contractor receives sick pay from December 20th of the previous year until the one-time allowance is paid on May 31 of the current year. This one-time allowance would be free of charge).

The one-time payment is allocated to the previous year even if this results in a lower contribution amount.

Detailed information on the March clause with an example.

Decision of the Federal Constitutional Court on the treatment of one-off benefits under social security law

For years there has been a dispute about the constitutionality of the statutory provision that social security contributions are levied on one-off payments such as vacation and Christmas bonuses.
Basically it was about the following:
If social contributions are collected, corresponding benefits must also be paid (e.g. sickness benefit or unemployment benefit). If no additional payments are made, no contribution may be made for them. The Federal Constitutional Court ruled in May 2000. The federal government had to pass a legal regulation by June 30, 2001.
Either one-off payments should become free of charge in the future
or
the contributions had to be taken into account when receiving benefits (i.e. correspondingly higher benefits were paid).

Since January 1, 2001, the law regulating the social security treatment of one-off benefits has been in effect. Social security contributions from one-off payments in increased benefits for sickness benefits, unemployment benefits, ... are taken into account.

Reduction of special allowances due to illness

The permissibility of reducing special payments (vacation pay, Christmas bonus, ...) due to illness is regulated by law. On the page sick pay (sick pay) you will find an explanation and an example on this topic.


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