Employers must withhold wage tax on each salary payment and pay it to the tax authorities on behalf of the employee. This not only applies to cash wages, which are paid out through the payroll, but also to other non-monetary benefits and gifts. Identifying and correctly acknowledging these taxable items presents a great challenge for companies.
This especially holds true as not all legal questions have been definitively answered.
Alongside frequent changes to the legal framework, new compensation models are continually introduced that promise, for example, savings on wage tax and social insurance through the exchange of cash wages to tax-favourable compensation in kind. If such models are not correctly set up and put into practice, they can pose significant liability risks for employers.
Our clients include international companies and businesses from a variety of sectors and of different sizes: DAX and MDAX companies, but also medium-sized companies.
Each company has different needs and individual requirements. Close contact with our clients is therefore very important to us. The extensive experience of our WTS wage tax experts enables us to provide the best possible support to our clients with their daily tax issues and projects, e.g. assisting with organizational changes and implementing wage tax changes in the company.
Our wage tax experts are pleased to assist with all questions relating to wage tax & social insurance:
We advise our clients on all wage tax issues that arise in their companies. These include issues such as use of the one-fifth rule for severance pay, taxation of company cars, possibilities of salary conversion and flat-rate taxation. We also help with questions regarding the use of tax allowances and limits, the tax treatment of reimbursed travel expenses and allowances for double household.
We advise on BGM measures (workplace health management), taxation of gifts, entertainment and events (non-monetary gifts), company pensions and payments to pensioners. We are also experts on the specifics arising from the cross-border secondments of employees, as well as on general questions regarding payroll, the payroll tax certificate and obtaining electronic wage tax details.
We support our clients by answering ongoing questions and advising on drafting or updating guidelines and operational instructions. We also provide employee training and assist with implementing processes that ensure taxation.
The introduction of section 37b of the Income Tax Act (EStG) has put the issue of non-monetary gifts as a focus of tax audits. This new development allows companies to tax non-monetary gifts to third parties and their own employees at a relatively low flat-rate tax rate of 30%, so that taxation is compensated for the recipient.
We answer questions competently and reliably and always keep in mind the further consequences for business expense deduction for the company, VAT and social insurance.
Alongside the question of whether flat-rate taxation is at all permissible and which expenses have to be taxed, it also needs to be clarified how our clients can implement the flat-rate taxation regulations into their company - whether by manual reporting channels or by using IT solutions.
Dynamically growing businesses and large corporate structures regularly face the task of issuing their employees with guidelines and instructions in order to meet the legal requirements for a correct tax treatment of a variety of issues. We provide our clients with optimal support with this and work with them to develop the best individual solution. We can review existing processes and test them for efficiency.
To be best prepared for an external wage tax audit, we help our clients before the audit takes place, e.g. by reviewing the existing tax processes or simulating an external wage tax audit. During the audit, we provide support with identifying facts and answering the auditor's questions. We do of course also accompany our clients for the final meeting with the tax authorities. After the audit, we assist with implementing measures to avoid repeat findings and with the preparation of results, e.g. for VAT and social insurance purposes (in cooperation with WTS Legal).
Although we always try to solve contentious issues with the tax authorities by mutual agreement, it may still be necessary to initiate an appeal procedure (appeal or legal proceedings). As tax advisers and lawyers, our wage tax experts are ready to achieve the best possible results for our clients in such cases and to participate in further advancing wage tax law.
Wage payments are usually subject to social insurance contributions. However, wage tax regulations increasingly differ from the regulations of social insurance law. As a result, the tasks of human resources - and especially payroll accounting - are becoming increasingly complex.
In cooperation with WTS Legal, we help with questions regarding social insurance, for example on the social insurance treatment of temporary staff (mini-jobs), students and interns. We assist with procedures to establish status, with questions regarding an obligation to contribute to the artists’ social insurance scheme, with analysing the findings from external wage tax audits, and provide support during audits by social insurance institutions, including any possible opposition proceedings.
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