HR-Glossar
Sachbezug (benefit in kind)
What counts as a benefit in kind in Germany, how it is valued, where the line to cash pay runs and what payroll has to watch.
1. What is Sachbezug (benefit in kind)?
A Sachbezug is a benefit provided by the employer that does not consist of money but has an economic value – a company car for private use, subsidised meals, accommodation, vouchers, discounts on goods and services, company devices used privately.
Because benefits in kind are remuneration, they are in principle subject to tax and contributions. They are valued under Section 8(2) EStG at the value the benefit has for the employee – depending on the type, at the ordinary end price at the place of supply, at an official benefit-in-kind value under Section 2 SvEV (for meals and accommodation, for instance), or under a rule of its own such as the percentage method for company cars.
Tax law provides exceptions, and they are what makes benefits in kind attractive: a monthly threshold for small benefits, a separate threshold for small gifts on personal occasions, provisions for job and nationwide travel passes, workplace health promotion and discount allowances.
All these thresholds and values are reset regularly – they must be checked against the current position and are deliberately not stated in this entry.
One term needs care in English. These are thresholds with a cliff edge, not allowances: exceeding one by a single euro makes the entire amount taxable, not just the excess.
2. Origin and development
Benefits in kind are older than payment in money – board and lodging were long part of remuneration. Their treatment for tax followed the principle that, for someone's ability to pay, it makes no difference whether they receive money or a benefit of equivalent value.
The most important development of recent years concerns the boundary between a benefit in kind and cash pay. Voucher schemes had drifted far from the idea of a benefit in kind; the legislature therefore clarified when a voucher or card solution is still a benefit in kind. What is decisive today is that it entitles the holder exclusively to obtain goods or services and meets certain criteria of payment services law – a card with a cash function is cash pay.
3. Core principles and how it works
A benefit in kind is remuneration
It counts towards gross pay and is in principle subject to tax and contributions. Exceptions are narrowly drawn and tied to conditions.
A threshold is not an allowance
Where a threshold is exceeded, the entire amount is taxable, not merely the excess. One euro too much costs the whole relief.
The requirement to be additional
Many reliefs require the benefit to be provided in addition to the pay owed anyway. Converting cash pay into a benefit in kind does not satisfy that.
Valuation according to the type of benefit
Ordinary end price, official benefit-in-kind value or a special method – the valuation rule follows from the item and is not freely selectable.
A separate wage type for each variant
Tax-free, flat-rate taxed and normally taxed are three different treatments. They belong on separate wage types, not on one with a note.
4. Who is Sachbezug (benefit in kind) relevant for?
- Employers offering additional benefits – benefits in kind are the most common instrument for it. - Employees with a company car, travel pass or meals – the benefit affects their net pay directly. - Payroll teams – valuation, threshold monitoring and wage type control are ongoing work. - Auditors – benefits in kind are a regular focus of payroll tax audits.
5. How it differs from related terms
- Benefit in kind and cash pay – what decides is whether there is an entitlement to a thing or to money. A card with a cash function is cash pay, even where it was intended as a benefit in kind. - Benefit in kind and reimbursement of outlays – someone who advances the company's own expenses and is reimbursed receives no remuneration. - Benefit in kind and small gifts – gifts on personal occasions have their own, lower threshold and run alongside the general one. - Benefit in kind and company events – a separate allowance with its own structure applies to company events.
6. Variants and adaptations
- A company car for private use – valued by the percentage method or a logbook; favourable rates apply to electric vehicles. - Meals and accommodation – valued using official benefit-in-kind values. - Vouchers and payment cards – a benefit in kind only where the statutory criteria are met. - Job and nationwide travel passes – a relief of their own, tied to being additional. - Discounts on the employer's own goods – with their own discount allowance. - Workplace health promotion – its own allowance, with requirements as to the measure.
7. Advantages and challenges
Advantages
- Additional benefits often have more effect on the recipient than the same amount in money
- Where the thresholds are observed they remain free of tax and contributions
- They create commitment without changing the pay structure
- Many variants can be introduced without much administrative effort
Challenges
- Thresholds bite hard – one euro too much makes everything taxable
- The boundary between a benefit in kind and cash pay is demanding with voucher schemes
- The requirement to be additional rules out salary conversion in many cases
- Values and thresholds change annually and create maintenance work
- A regular focus of payroll tax audits
- A tax-free benefit does not raise the basis for wage replacement benefits — which is often overlooked
8. Best practices for implementation
Monitor thresholds monthly, not annually
The general benefit-in-kind threshold applies per month and is not carried forward. Monitoring on an annual cycle comes too late.
Have voucher schemes checked in advance
Whether a card meets the statutory criteria decides the entire tax treatment. A binding ruling from the tax office creates certainty.
Document that the benefit is additional
The benefit must come on top of the pay owed anyway. That belongs in the agreement, not in the intention.
Keep separate wage types
Tax-free, flat-rate taxed and normally taxed are three treatments – and three wage types.
9. Tips for employers and employees
For employers
- **A threshold is not an allowance** – exceeding it makes the full amount taxable
- **No cash withdrawal on voucher cards** – it turns the benefit in kind into cash pay
- **Update the annual values** – benefit-in-kind values and thresholds change at year end
- **Obtain a binding ruling where uncertain** – it binds the tax office and costs nothing
For employees
- **Benefits in kind appear on your payslip** – they increase gross pay even though nothing is paid out
- **With a company car, check the method** – a logbook can be cheaper than the percentage method but must be kept without gaps
- **Bear the effect on wage replacement benefits in mind** – tax-free benefits do not raise the basis for sickness or parental benefit
10. Conclusion
Benefits in kind are an effective instrument, because a benefit often has more effect than the same amount in money – and because it stays free of charges where the thresholds are observed. That is also where the risk lies: thresholds bite hard, the requirement to be additional rules out conversion schemes, and the boundary with cash pay is demanding with voucher cards. Monitoring monthly, documenting that the benefit is additional and settling doubtful cases by binding ruling secures the advantage without the back payment at the next payroll tax audit.
For an international group the vocabulary itself is worth pausing on. What German law provides here are thresholds with a cliff edge, not allowances: a scheme designed on the assumption that only the excess is taxed will be taxed in full the first month it goes one euro over. That is a design question, and it is answered before the scheme launches or not at all.
A note on sources: there is no official English version of the Income Tax Act, the SvEV or SGB IV (checked on 2026-09-28); the German texts are cited below and their wording governs.
Sources
- Section 8 EStG – Income, including valuation of benefits in kind (German original; no official English version) (opens in a new tab)
- Section 2 SvEV – Meals, accommodation and housing as benefits in kind (German original) (opens in a new tab)
- Section 14 SGB IV – Remuneration (German original) (opens in a new tab)
Related terms
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