Blog.Payroll

Non-wage labour cost reduction 2023 & 2024 through DB reduction

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As part of the 2nd statutory inflation relief package, a change has been effected to reduce the employer's contribution to the Employer Family Burden Equalisation Fund (Dienstgeberbeitrag zum Familienlastenausgleichsfonds = DB) from 3.9 % to 3.7 % in the calendar years 2023 and 2024.
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This DB reduction will apply to all employees for whom the employer's contribution to the DB is to be paid – thus not only contracted employees are included, but also, for example, freelancers and Directors with significant holdings.

As a prerequisite for the reduction of this part of the non-wage labour costs, however, it was stipulated that the reduction must be explicitly based and documented on a wage-forming regulation.

According to the Federal Ministry of Economics and Labour (in agreement with the Federal Ministry of Finance and the Federal Chancellery), a wage-forming regulation also includes, among other things, an internal company file note, which must be drawn up and kept for possible inspections by the tax authorities.

Additional information to employees is not required.

However, it is recommended - in addition to the mandatory file note - that the FAQ collection of the Federal Ministry of Economics and Labour on the topic of "Reduction of non-wage labour costs" be made available and kept on file.

Should you wish to make use of the reduction of the non-wage labour costs rate and therefore of this possibility of cost savings, we will be pleased to send you a corresponding template for the necessary internal company file note as well as the corresponding FAQ collection.

We look forward to your enquiry and to discussing this possibility of reducing non-wage labour costs together with you.

If you have any questions, please do not hesitate to contact our experts.