Tax allowance doubled: more tax advantages for startup employees

Tax allowance doubled
More tax benefits for startup employees

Company start-ups continue to receive strong support in Germany. Start-up employees can look forward to a higher tax-free allowance for company investments. For startups, the step decided by the Finance Committee is intended to facilitate both incentives and loyalty.

In the future, startups should be able to bind their employees more closely with tax advantages. CDU / CSU and SPD have agreed on details in the Bundestag, as both government partners announced. These were decided by the finance committee. This means that approval in the plenum is deemed to have been given. The financial policy spokeswoman for the CDU / CSU parliamentary group, Antje Tillmann, spoke of a good day for the startup scene, i.e. newly founded and often innovative companies.

The federal government wanted to double the tax exemption for employee participation to 720 euros per year. The Bundestag has now decided to double this again to 1,440 euros. “This should make it easier for startups to attract and retain qualified employees,” said SPD politician Wiebke Esdar. “Employees of startups do not initially have to pay tax on their income from the transfer of asset shares in the employer’s company. Taxation should only take place at a later point in time, usually at the time of the sale, if there is a change of employer or at the latest after a period of twelve years respectively.”

According to earlier government statements, the new regulations will apply from July 1, 2021. The Bundestag should now formally approve the so-called Fund Location Act on Thursday. Tillmann said the scope of the affected companies had also been expanded. “Contrary to the government draft, twelve-year-old companies can now benefit from the new regulation.” Federal Finance Minister Olaf Scholz recently said that the goal was to give the startup scene a boost and to take a leading position here internationally. “It is important to me that the employees can also participate in the success of the company.” So far, employees have had to pay taxes on benefits from the investments immediately.