Short-time work is tax-free – actually. Because of the complicated tax law, the state is still planning billions of euros in back taxes for short-time workers for 2020. t-online explains why and who is affected.
The state will collect 1.6 billion euros for the 2020 tax year through the so-called progression proviso for short-time work benefits. For employees on short-time work, this means that they are now threatened with additional tax claims, even though the short-time allowance itself is tax-free. This emerges from a request from the left in the Bundestag to the federal government.
The answer is available from the German Press Agency in Berlin. This reservation means that the short-time work allowance increases the tax rate for the regular wages and other income of the employees.
Short-time work allowance (Kug) is tax-free, but the recipient is indirectly debited afterwards. Because the benefit increases the tax rate for the rest of the taxable income. This is called the progression proviso.
Short-time work: Who is threatened with tax back payments
As a guide: if you only received short-time allowance in a few months – i.e. did not work at all – but were fully employed for the rest of the year, you can usually expect a tax refund. However, it often looks different if you have only received 50 percent of the short-time work allowance.
If you receive the benefit in addition to your wages, you are often threatened with additional payment. However, this also depends on how much income-related expenses you can claim and what tax bracket you are in. How exactly the progression proviso is composed and who is most affected by it, we explain here.
Six million short-time workers at the top
Short-time work should also be the focus of a joint appearance by Federal Labor Minister Hubertus Heil (SPD) and the Chairman of the Federal Employment Agency, Detlef Scheele, on this Friday. Both want to take stock of “One year Corona” in terms of labor market policy. According to Scheele, short-time working secures employment on a large scale and prevents unemployment.
Between February 1 and February 24, the Federal Agency received short-time work notifications for 500,000 people. In December, 2.39 million people were paid short-time work benefits. The peak was reached in April last year with almost 6 million people.
Last year, it had been discussed for months whether the so-called progression proviso for short-time work benefits should be suspended for 2020. That this did not happen was justified in the coalition with the justice to other workers.
There is a risk of repayment of hundreds of euros per person
The left-wing MP Sabine Zimmermann assumes that short-time workers face additional tax claims of several hundred euros per person. To what extent you are personally affected by tax refunds, you can here with the calculator of the Bavarian State Office for Taxes check. The progression proviso also applies to unemployment benefits. However, the federal government was unable to provide any information on the associated additional tax revenue.
Zimmermann criticized: “Anyone who receives short-time allowance has already suffered a considerable loss of income as a result.” Zimmermann said that no one could explain that there is still a risk of additional tax claims. She called for the progression proviso for short-time work benefits to be abolished.
The Federal Ministry of Finance points out that drawing short-time allowance does not automatically lead to additional tax payments. That depends, for example, on the tax class, the wage tax deductions before Corona or any other income.
“If almost exclusively tax-free short-time work benefits, subject to progression, are received, there is no tax to be assessed. Every short-time work worker must submit a tax return for the year of short-time work.