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The German Ministry of Finance (BMF) has deferred the implementation of the daily tax table for wage tax calculations in salary split structures to the 1st of January 2025.
This affects employees who work in Germany and receive both taxable and non-taxable wages. A simplification rule allows for 20 tax days per month to be assumed for full-time employees, simplifying the tax calculation. The use of the daily tax table may increase wage tax liability, especially for those with limited tax liability, whilst restrictions in the Annual Tax Act 2024 will further limit the ability to perform annual wage tax equalisations. For EU/EEA and Swiss residents, voluntary assessments are an option, though they may lead to higher advisory costs. For 2023 and 2024, employers can correct and refund over-withheld wage tax.
For further details on this, Dr. Christian Hick from our German member firm Flick Gocke Schaumburg has provided an in-depth analysis here.
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