Rising energy and food prices are a burden on many citizens. The legislator is therefore planning various tax measures to provide relief. Payroll accounting must be prepared to correct the 2022 wage tax deduction.
Tax relief
With the draft of a Tax Relief Act 2022, the federal government wants to implement measures to relieve the population in view of the tense price developments. What is planned? Payroll accounting must deal with the following measures in particular:
- The employee lump sum is to be raised to 1,200 euros (previously: 1,000 euros).
- The basic tax-free allowance (previously: 9,984 euros) is to be raised to 10,347 euros.
- The distance allowance for long-distance commuters (from the 21st kilometre) is to be raised to 0.38 euros.
All three measures are to apply retroactively from January 1, 2022.
In the press release of 16 March 2022 , Federal Finance Minister Christian Lindner is quoted as follows: “The current situation is financially challenging for many citizens. By raising the employee lump sum and the basic tax-free allowance, we are relieving the burden quickly and unbureaucratically. Numerous taxpayers benefit from this. Especially now, it is important that the relief is received. For this reason – and also to compensate for the inflation rate – we are also raising the basic tax-free amount. In addition, we relieve those who have to commute long distances every day. Through the mobility bonus, the early increase in the distance allowance also has an effect on low-income earners.”
When the wage tax deduction must be corrected
However, of course, payroll accounting has already made the wage deduction for employees in 2022. If the Tax Relief Act is implemented as planned, then in most cases this means that too much income tax (and possibly also church tax) has been deducted.
But when does payroll accounting have to take action? The government draft already draws attention to the fact that the tax authorities will publish modified program schedules for the automatic calculation of wage tax. In addition, it is clarified that employers are only obliged to take into account the higher basic allowance and the higher employee lump sum when calculating wage tax once these programme schedules have been published and the date from which the wage tax deduction for the wage payment periods already settled is to be corrected has been communicated.
Note: The Federal Ministry of Finance has already published the drafts of the amended programme schedules for the 2022 wage tax deduction (applicable from 1 June 2022).
How the wage tax deduction is corrected
The correction is generally made in accordance with § 41c (1) sentence 1 no. 2 of the Income Tax Act. Here it says: “The employer is entitled to refund wage tax levied so far or to withhold wage tax not yet levied if it realises that it has not yet withheld wage tax in accordance with the regulations; this shall also apply in the event of a retroactive amendment to the law.’
How the wage tax deduction is then corrected is not necessarily determined. According to the government draft, the following variants are possible:
- Recalculation of past wage payment periods,
- calculation of difference for these wage payment periods or
- a refund in the context of the calculation of wage tax for any other income that is due soon.
But what happens if the employer does not correct the wage tax deduction? In this case, the employee can take action himself and submit a corresponding application to the permanent establishment tax office.
Conclusion: The legislative process has not yet been completed. However, payroll accounting must already adapt to the possible changes. The employees of a company will hope that they will see the tax relief in their account as soon as possible.
As a specialized partner for payroll and payroll, we will of course stay tuned and keep you up to date.
Image source: Pixabay Photographer: Reimund Bertrams
Author
Sylvia Meier
Guest Author
Sylvia Meier is a certified financial economist (FH) and has worked at the tax office, in consulting (Big Four firm), and for a specialized publisher. Today, as a freelance consultant, she supports companies and can demonstrate numerous publications, particularly on the topics of taxes, controlling, accounting, and finance.
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September 30, 2021
