German salary conversion

The term salary conversion refers to the conversion of parts of a wage or salary into tax-privileged allowances.

The advantage of this is that the employee is not taxed so much in the tax return, because the converted wage components are not taxed regularly or even at all. How such tax-privileged subsidies are to be handled in detail in the tax return for your individual case can only be best explained by a tax advisor or a payroll tax association. You can then deduct this tax subsidy with the next tax return. Each salary conversion is based on a corresponding agreement between the employee and the employer.

For example, in the case of such tax-privileged subsidies, it may be a question of subsidies for the journey between your apartment and your place of work by public transport. Since January, 1 2002, an employee may also require the employer to convert part of his salary into an occupational pension scheme. This is also tax-deductible and reduces the tax burden in the tax returns.