Law & Numbers - News Tax

Fringe benefits from employer loans

12.08.2007 (Germany)

New tax rules! Starting 2008 significant additional taxes possible!

With decree as of June 13, 2007 the Federal Ministry of Finance has adopted the change of jurisdiction by the Federal Tax High Court.

The good new is, that loans granted by the emloyer to employees at market conditions do not create taxable fringe benfits. This is true even in case that the interest rate is below the 5 % threshold which was applied by the tax administration in the past. However, for high-yield loans like consumer credits 5 % was a comparable cheap solution in the past. Starting 2008, any balance between the market rate and the agreed interest rate is subject to payroll taxes.

We strongly recommend to check and amend the loan agreements with employees in order to avoid/reduce additional payroll taxes.

Contact for direct information:

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