Germany's €1,000 tax-free bonus for workers blocked by Bundesrat
A proposed €1,000 tax-free relief bonus for employees has been blocked by the Bundesrat. The decision follows criticism from business groups over added costs for employers. The measure was intended to ease financial pressure during the Iran conflict but faced strong opposition.
The federal government had suggested the bonus as part of wider relief efforts. Alongside this, fuel prices were cut by 17 cents per litre for two months. However, the relief bonus itself required employers to cover the extra payment.
States raised concerns about losing revenue, as two-thirds of the cost would have fallen on them. The German Chamber of Commerce and Industry (DIHK) supported the rejection, calling it a necessary step to avoid new financial burdens on businesses. They also warned against setting a precedent for future demands. The German Association for Small and Medium-Sized Businesses (Mittelstandsverband) labelled the proposal an 'outrage'. They argued it unfairly shifted the burden onto employers. Meanwhile, the DIHK pushed for broader relief measures, including cuts to energy costs, taxes, bureaucracy, and labour expenses. Their goal was to protect investment, jobs, and Germany’s economic standing.
With the Bundesrat’s rejection, the relief bonus will not proceed. Business groups have instead called for more sustainable solutions to reduce costs. The focus now shifts to alternative measures that could support both workers and employers without increasing financial strain.
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