Adjustment of Non-Cash Compensation Values for 2025: Important Changes for Employers

On November 22, 2024, the Federal Council approved the “Fifteenth Ordinance Amending the Social Security Remuneration Ordinance.” The ordinance introduces new non-cash benefit values for free room and board effective January 1, 2025. These values were adjusted based on consumer price trends through June 30, 2024. Employers should be fully aware of these changes, as non-cash benefits are subject to tax and social security contributions as monetary benefits.

Increase in non-cash benefit values for housing

Starting in 2025, the monthly value for the provision of accommodation will increase nationwide from €278 to €282. This value is significant when employers provide their employees with accommodation free of charge or at a reduced rate. The amount is considered part of the employee’s wages and is taxable accordingly.

New values for free or discounted meals

The non-cash benefit values for meals have also been raised. The monthly value increases from €313 to €333. This amount is broken down among the individual meals as follows:

• Breakfast: €69 per month or €2.30 per day (previously: €65 / €2.17),
• Lunch: €132 per month or €4.40 per day (previously: €124 / €4.13),
• Dinner: €132 per month or €4.40 per day (previously: €124 / €4.13).

These amounts apply to meals provided to employees free of charge or at a reduced rate, for example in company cafeterias. Employers should ensure that these new amounts are correctly reflected in payroll records.

Valuation of Housing as a Benefit in Kind

For housing provided as a benefit in kind, the value is generally based on the local market rent. Any potential disadvantages resulting from the location of the housing relative to the workplace must be taken into account.

If determining the local market rent is exceptionally difficult in individual cases, the following flat rates may be applied starting in 2025:

• Standard amenities: €4.95 per square meter per month (2024: €4.89),
• Basic amenities (e.g., without central heating or without a bath/shower): €4.05 per square meter per month (2024: €4.00).

These flat rates simplify billing, particularly in cases where comparable rents are difficult to obtain.

Relevance for Employers

The adjustment of non-cash benefit values directly affects tax and social security calculations. Employers must enter the new values into their payroll systems to ensure correct taxation. The new values must also be taken into account when drafting employment contracts or additional benefits that include room and board.

Conclusion

The changes to the non-cash benefit values for 2025 reflect the rising cost of living and affect all employers who provide their employees with non-cash benefits such as housing or meals. It is advisable to implement the new regulations early and inform employees accordingly. This ensures that all payroll processing is accurate and compliant with the law.

Trimborn . Partner keeps you informed about economic and tax-related topics. With our offices in Düsseldorf and Oberhausen, we are available to assist you in person. Our team of qualified tax professionals supports you with all tax-related questions and concerns. Contact us to schedule a consultation.