Short-time allowance (Kurzarbeitergeld): Obligation to file a tax return

As a result of the Corona crisis, the regulations regarding the receipt of short-time allowance were changed several times. For example, the period for receiving a short-time allowance was extended to up to 24 months. There are also specific regulations on the tax treatment of employer subsidies (Arbeitgeberzuschüsse) for short-time allowance and seasonal short-time allowance (Saison-Kurzarbeitergeld). But what do these rules mean for the tax return?

The subsidies are tax-exempt if, together with the short-time allowance, they do not exceed 80 percent of the difference between the expected wage and the actual wage.

The income replacement benefits such as the short-time allowance (Kurzarbeitergeld) are usually tax-free. But in fact, they are included in the calculation of the tax rate, and the payments are subject to the so-called progression clause (Progressionsvorbehalt). The progressive tax rates mean that the higher the income, the higher the tax rate. This higher tax rate is then applied to the taxable income. People who receive income replacement benefits may therefore have to make additional tax payments.

Persons who receive more than 410 euros of short-time allowance in a calendar year are obliged to submit a tax return. Those who do not submit the return „voluntarily“ should be aware that the tax offices receive information about the receipt of short-time allowance by means of data exchange, and then may request to submit the tax return compulsorily after one or two years, and this may result in considerable surcharges for late tax payments.

Supplementary amounts (Aufstockungsbeträge) are also subject to the progression clause (§ 32b para. 1 no. 1g Income Tax Act (EStG)). They must be entered by the employer in the electronic employment tax statement (Lohnsteuerbescheinigung)(for the calendar year 2020) under number 15.