The so-called recreation lump sum or recreation allowance is an allowance that employers can grant their employees in a tax-optimized manner. Thus, employers can reimburse their employees once a year with a lump sum for the purpose of recreation. This employee benefit is taxed at a flat rate of 25% for the employer and is not subject to social security contributions. For employees, it is exempt from both tax and social security contributions.

Paragraph 40 of the Income Tax Act (EStG) on lump-sum wage tax in special cases regulates recreation allowances. Paragraph 2, sentence 1, number 3 of the EStG states that the employer may levy wage tax at a flat rate of 25% insofar as he grants recreational allowances of these, together with the relax allowances granted earlier in the same calendar year, do not exceed €156 for the employee.

In addition to the allowance of €156, employers have a further €104 available annually as a recreational allowance for the employee's spouse and a further €53 for each child.

Example:

Mr. Zukowski, who is married and has three children, takes a two-week vacation with his family. One week after returning, he submits his claim for the recreation allowance through the Circula app. The following month, he receives a one-time reimbursement of €416 from his employer.

Every employee can be granted the recuperation allowance by the employer. This benefit is not only available to full-time employees, but also to part-time employees and working students.

No, holiday pay and the Relax Benefit are not the same and may be paid in parallel. They are not mutually exclusive and are both voluntary measures by the employer.

The amount can be paid out once per calendar year. The entitlement comprises the entire amount once. There can be no splitting of the amount over the year.