By law of 12 May 2022 ("Steuerentlastungsgesetz 2022") the German government has decided that the so-called "Energiepreispauschale" ("Energy price flat rate", abbreviation: EPP) is supposed to be paid out as a one-time lump sum. Through this the citizens of Germany should be relieved from the increased costs for energy due to the war in Ukraine. This blog contains some basic information on this and is the English version of the original post.
Who is entitled to the EPP?
The EPP can be claimed by every person that is considered to have unlimited tax liability for Personal Income tax (Einkommensteuer). This means: Every person with residence or usual stay in Germany in the calendar year 2022. This is also the case if these requirements were only met for a partial amount of 2022. In addition, the EPP can only be claimed if income is generated from the following tax types of income:
Income from agriculture and forestry
Income from commercial acitivities / enterprises
Income from self-employed work
Income from employed work -> Employees with "Steuerklasse" I to V
In case of employees, also employed directors of corporations and "mini-jobbers" are in scope of the EPP. Everything mentioned above is only valid for employments that are acceptable from a tax perspective (i.e., that are really in place).
Recipients of pension payments and pensionnaires without any other income are excluded from the EPP.
Amount & taxability
The EPP amounts to 300.00 EUR gross. It is subject to tax, but exempt from social security. By being subject to tax the recipients of higher income should profit less from the EPP than people with lower income.
In case of married people / civil partnerships, both partners can be eligable for the EPP if both of them fulfill the requirements for entitlement stated above.
Payout & Process
In case of employees, the EPP is paid out with the monthly wage in September 2022. Therefore, it is the duty of the employer to initially carry the tax burden of the EPP and collect and pay the corresponding wage tax. However, the wage tax is credited as part of the respective wage tax return. In the end, the government of Germany will fully carry the burden. Employers & employees should therefore check their payment slips for August and September for the correct payout of the EPP. The payment by the employer is a legal duty and cannot be avoided.
In case of other sources of income and in cases of employment where the employer is not obligated to pay out the EPP, it is only taken into account as part of the income tax return 2022. For entrepreneurs who are subject to advance payments to income tax, the advance payment for September 2022 (Deadline: 10 September 2022) is reduced by the amount of the EPP and is therefore considered prematurely. If no advance payments need to be made, the EPP will be taken into account and settled with the income tax return 2022, so basically in the calendar year 2023 thorught the German Tax Authorities. Payout is made at that point as well, which is a clear disadvantage for entrepreneurs.
Additional information
For addition information on the EPP, especially in special cases (e.g. maternity/paternity leaves, sickness leave, etc.) we recommend the FAQ of the German Tax Authorities (only in German):
However, in case of any questions feel free to contact me as well.
Best regards, Dennis Appelhoff