New requirements
The 2026 Budget Accompanying Act (“Budgetbegleitgesetz”) has once again introduced the possibility of granting employees a tax-free employee bonus of up to EUR 500.00.
Unlike last year, the 2026 employee bonus must, however, be based in full on a wage-setting provision in order to qualify for tax-free treatment. This is particularly the case where the bonus is provided in a collective bargain agreement (CBA) or is governed by a works agreement (“Betriebsvereinbarung”) based on an authorisation under a collective bargaining agreement.
If there is neither a collective bargaining agreement nor membership of a statutory professional body (“Kammer”) and no works agreement is in place, the 2026 employee bonus may be governed by an individual written agreement concluded with all employees of the company.
Tax treatment
To qualify for tax exemption, the employee bonus must be an additional payment by the employer that has not customarily been granted in the past. (Tax-free employee bonuses paid in previous years do not prevent the exemption from applying.)
The maximum tax-free amount is EUR 500.00 per employee for 2026 (calendar year). The payment may only be made between 1 July 2026 and 31 December 2026. A retroactive payment for 2026 is also possible until 15 February 2027 at the latest as part of a payroll tax adjustment.
As in previous years, the employee bonus may not be used to convert existing remuneration components or replace salary components that have already been agreed. If all requirements for tax exemption are met, the bonus neither increases nor counts towards the annual one-sixth threshold.
If both a profit-sharing payment (“Gewinnbeteiligung”) according to § 3 Abs. 1 Z 35 EStG 1988 and an employee bonus are granted in 2026, the two benefits are tax-free up to a combined amount of EUR 3,000.00 per calendar year. If the total amount exceeds this limit, the excess is subject to wage tax.
Social security
While the employee bonus may qualify for exemption from wage tax under certain conditions, there is no corresponding social security relief. The bonus is therefore fully subject to social security contributions and the general social security rules.
Whether the employee bonus is treated as regular remuneration or as a special payment for social security purposes depends on the circumstances of the individual case. If the decision to grant the employee bonus is made anew each year and the employer does not indicate that the payment will recur in future, it should generally be regarded as one-time remuneration.
If, however, the employer decides to grant the bonus regularly or on a recurring basis, the requirements for classification as a special payment may be met.
Objective differentiation
Where a wage-setting provision is in place, the tax-free 2026 employee bonus does not necessarily have to be granted to all employees or in the same amount. Differentiation is generally permissible if it is based on objective, verifiable and business-related criteria. These criteria should be clearly explainable and appropriately documented. Arbitrary or unjustified distinctions are not permitted.
We are happy to assist you in assessing whether your company meets the requirements for granting a 2026 employee bonus. In particular, we can advise you on the requirement for a wage-setting provision or an authorisation under a collective bargaining agreement.
