Health promotion is becoming increasingly important for companies, as health contributes to productivity and therefore to the company's success. According to the "Benefit Trends Survey 2023" by WTW, health plays a very important role in many companies and health benefits are therefore also very popular. A total of 65% of companies focus to a large extent on the holistic wellbeing of their employees.
Health was one of the top answers when companies were asked about their priorities for supporting employees. For 29% Mental health status in the top 3 and 27% have health benefits among the top 3 located.
There are many health benefits, from fitness and massage to digital coaches. However, employers always have one fundamental problem: the costs. Although benefits indirectly contribute to the company's success, they are not as visible as other investments, which is why the budget for OHM measures often fails. The German government also recognised this many years ago and therefore created the possibility of tax exemption for BGM measures under certain conditions. However, companies are still very reluctant to utilise this option, even though there is a lot of hidden potential here.
§ Section 3 number 34 EStG
Workplace health promotion measures that fulfil the requirements of Sections 20 and 20b SGB V in terms of quality, purpose, targeting and certification can be tax-exempt. These include
Irrespective of the provisions of Section 3 no. 34 EStG, benefits provided by the employer for company health promotion are not wages if they are predominantly provided in the company's own interest.
Further information on the requirements for benefits that can be provided tax-free by employers can be found in the Letter from the Federal Ministry of Finance (PDF, not barrier-free, 473 KB) dated 20 April 2021.
The Federal Ministry of Health is not authorised to provide legally binding information on the tax treatment of healthcare measures. However, in order to achieve legal certainty and freedom from liability as an employer with regard to the correct application of Section 3 No. 34 EStG, it is possible to obtain information on the respective individual facts from the competent tax office (Section 42e EStG).
The 600 euros, which are tax-free according to §3 No. 34 EStG, is an allowance and not a tax-free limit. But what exactly is the difference? If companies want to offer more than the 600 euros per year, this is not a problem. This allowance can be fully utilised and only the excess amount is subject to tax and social security contributions. This would not be possible with an exemption limit, as the amount would become fully subject to tax and social security contributions from the first cent above the limit.
You have the opportunity to offer your employees health-promoting measures worth up to 600 euros per year free of tax and social security contributions. These benefits are not recognised as a non-cash benefit for employees. However, it is important to note that this tax relief only applies to additional benefits that go beyond those prescribed as part of the employment relationship. Therefore, deferred compensation, where part of the salary is voluntarily waived in favour of tax-free health benefits, is also not possible. In such cases, taxes would still be payable.
The employer has the option of paying or subsidising the costs or fees for prevention measures, regardless of whether these are carried out within the company or externally. Certified benefits up to an amount of 600 euros per calendar year (since 2020, previously 500 euros), which are provided in addition to the wages already owed, are tax and contribution-free.
This allowance of 600 euros per employee applies for each calendar year and for each individual employee. If the amount is exceeded, only the excess is subject to tax and contributions.
The 600 euros, which are tax-free according to §3 No. 34 EStG, is an allowance and not a tax-free limit. But what exactly is the difference? If companies want to offer more than the 600 euros per year, this is not a problem. This allowance can be fully utilised and only the excess amount is subject to tax and social security contributions. This would not be possible with an exemption limit, as the amount would become fully subject to tax and social security contributions from the first cent above the limit.
You have the opportunity to offer your employees health-promoting measures worth up to 600 euros per year free of tax and social security contributions. These benefits are not recognised as a non-cash benefit for employees. However, it is important to note that this tax relief only applies to additional benefits that go beyond those prescribed as part of the employment relationship. Therefore, deferred compensation, where part of the salary is voluntarily waived in favour of tax-free health benefits, is also not possible. In such cases, taxes would still be payable.
According to § 20 SGB V, a certified prevention course is one that National Association of Statutory Health Insurance Funds are courses "designed to motivate and empower people to maximise the potential for a healthy lifestyle and prevent illness". These courses are subsidised by health insurance companies and receive a subsidy if they have been certified by a health insurance company or a third party commissioned with this task.
Under certain conditions, non-certified courses can also remain tax-free. If courses are provided solely for the employer's employees on behalf of the employer, there is no possibility of certification as health insurance funds are not involved. There are therefore conditions under which the prevention services can be tax-free:
Or
In the context of workplace health promotion, services in the area of "health-promoting work and lifestyle" are also exempt from tax. These services focus on behavioural prevention aspects. These are services with the aim of:
The above-linked implementation guide from the Federal Ministry of Finance makes it very clear which offers and services are not exempt from tax:
Isa Health Coach has been certified as a workplace health promotion measure in accordance with Sections 20 and 20b SGB V by major German health insurance companies and fulfils the criteria of the prevention guidelines. This means that Isa can be granted tax-free within the 600 euro budget. In addition, various health insurance companies subsidise Isa with an annual grant per employee. We would be happy to explain how this can work in a non-binding discussion.
Health promotion is an important topic and if there is an opportunity to save on taxes, companies should take advantage of it. Many measures and services are already certified by health insurance companies and are also subsidised by them. This is a great opportunity to support employees in leading a healthy lifestyle.
The information in this text does not constitute legal or tax advice. In principle, the options for your own employees should be discussed with a tax office. In addition, information on this can be obtained from the relevant tax office (§ 42e EStG).
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