Germany Fiscal Court Clarifies Taxation of Special Payments Made Due to Coronavirus

The German Federal Fiscal Court May 7 posted online Decision No. VI R 25/24, clarifying the taxation of special payments made due to the coronavirus pandemic. The taxpayer, an employer, voluntarily paid employees holiday pay and a year-end bonus annually, reducing the amounts in 2020 and instead paying special coronavirus payments in the reduction amount. The taxpayer treated the coronavirus payments as tax-free, but the tax authorities taxed them. On appeal, the Federal Fiscal Court found that: 1) grants and benefits in kind from employers, provided from March 1, 2020, to March 31, 2022, in addition to wages owed due ...