Flexible employee benefits are individually selectable perks that employees can choose from a predefined catalog based on their personal life situation. They include tax-free fringe benefits up to €50 per month, mobility budgets, meal allowances, or health benefits. Unlike rigid salary increases, they demonstrably improve employee satisfaction and strengthen employer branding.
What Are Flexible Employee Benefits?
Flexible employee benefits refer to additional perks that employers offer their staff on top of their regular salary – with the crucial difference that employees can choose from a catalog of various options themselves. This principle is also known as a "cafeteria system": like in a canteen, employees put together their individual benefits package.
The difference from traditional benefits lies in personalization. While conventional perks are the same for all employees (such as a company car for executives), flexible benefits adapt to different life stages. A young career starter might choose a mobility budget, while a father of a family prefers the childcare allowance.
Typical examples of flexible benefits include: fringe benefit cards, mobility budgets, meal allowances, gym memberships, training budgets, or additional vacation days.
The Most Popular Benefits in 2025
Tax-Free Fringe Benefits (€50 Threshold)
The €50 fringe benefit is one of the most widely used benefits in Germany. According to § 8 para. 2 of the German Income Tax Act (EStG), employers can provide their employees with up to €50 per month free of tax and social security contributions – provided the benefit is granted as a non-cash benefit (not as cash).
Important: The €50 limit is a tax exemption threshold, not a tax-free allowance. If it is exceeded by even one cent, the entire amount becomes subject to tax and social security contributions. Employers can grant these fringe benefits in the form of voucher cards, gift vouchers, or digital benefit solutions.
Mobility Benefits
According to the Circula Benefits Report 2025, mobility benefits are the most popular category among German employees. These include:
- Deutschlandticket as a job ticket: Since 2024, employers can offer the €49 ticket (since 2025: €58) as a tax-free fringe benefit.
- Mobility budget: A monthly amount that employees can use flexibly for public transport, car sharing, e-scooters, or bicycle repairs.
- Company bike leasing: Bicycles or e-bikes that employees receive through salary conversion or as an additional benefit.
Meal Allowances
Digital meal vouchers or food subsidies are a practical benefit with high everyday value. In 2025, companies can subsidize up to €7.50 per working day for lunch with tax advantages. With 15 working days per month, this results in a maximum allowance of €112.50.
Health and Fitness Benefits
Gym memberships, Wellpass subscriptions, or workplace health promotion are becoming increasingly popular. According to § 3 No. 34 of the German Income Tax Act (EStG), employers can spend up to €600 per year per employee tax-free on qualified health measures.
Work-Life Balance Benefits
Flexible working hours and home office options are no longer "real" benefits in 2025 – they are expected by many employees. An IZA study from 2020 showed that flexible working hours can increase productivity by up to 50 percent – even for routine tasks.
Tax Advantages and Regulations 2025
The €50 Fringe Benefit Exemption Threshold in Detail
The legal basis for tax-free fringe benefits can be found in § 8 para. 2 sentence 11 of the German Income Tax Act (EStG). For a fringe benefit to remain tax-free, the following requirements must be met:
- Additionality: The fringe benefit must be granted in addition to the salary already owed – salary conversion has not been permitted since 2020.
- No cash payment: It must not be a monetary benefit. Only vouchers, prepaid cards, or non-cash benefits are allowed.
- ZAG compliance: Vouchers and prepaid cards must meet the criteria of the German Payment Services Supervision Act (§ 2 para. 1 No. 10 ZAG).
- Observe the exemption threshold: Maximum €50 per month – if exceeded, the entire amount is taxable.
Additional Tax-Free Options
In addition to the €50 fringe benefit, there are other tax-advantaged benefits:
- Gifts for personal occasions: Up to €60 tax and contribution-free (max. 3x per year for birthdays, weddings, anniversaries)
- Childcare allowance: Unlimited tax-free for pre-school children
- Internet allowance: Up to €50 per month, flat-rate taxed at 25 percent
- Company pension scheme: Up to €302 per month tax-free (2025)
Avoiding Common Mistakes
The cash flow principle is crucial for fringe benefits: the time at which the benefit reaches the employee determines the tax allocation. Accumulating over several months is generally possible, but the monthly exemption threshold must never be exceeded. Document each fringe benefit with date and amount in the payroll.
Implementing Flexible Benefits: 5 Steps
Step 1: Conduct an employee survey Determine the actual needs of your workforce. Which benefits are desired? Which life stages are represented? An anonymous survey provides valuable insights.
Step 2: Check budget and tax options Define a realistic budget per employee. Work with your tax advisor to determine which benefits are most tax-efficient.
Step 3: Compare providers Platforms such as Benify, Circula, NAVIT, or ValueNet offer digital solutions for benefits administration. Compare features, costs, and integration options with existing HR systems.
Step 4: Start a pilot phase Test the benefit system first with one department or location. Collect feedback and optimize before the rollout.
Step 5: Evaluate regularly Benefits needs change. Conduct annual evaluations and adjust the offering accordingly.
Benefits as a Recruiting Advantage
Flexible benefits are more than just an employee retention tool – they are a genuine recruiting argument. Studies show that 76 percent of employees consider benefits an important factor when choosing an employer. In an employee market with a skills shortage, attractive perks can make the difference.
What matters is not just the benefits package itself, but the entire employer experience. A modern, fair application process is just as much part of employer branding as flexible perks. Practice shows: companies that combine objective selection processes with attractive benefits position themselves sustainably as attractive employers.
Would you like to optimize your application process in addition to benefits? The digital platform Aivy supports companies with scientifically validated assessments to improve the candidate experience and make objective selection decisions. Learn more about Aivy
Frequently Asked Questions About Flexible Employee Benefits
What are flexible employee benefits?
Flexible employee benefits are individually selectable perks that employers offer in addition to salary. Unlike traditional "one-size-fits-all" benefits, employees can choose from a catalog of different options – depending on their personal life situation and needs. Typical examples include mobility budgets, fringe benefit cards, or meal allowances.
What is the fringe benefit exemption threshold in 2025?
The fringe benefit exemption threshold in Germany is €50 per month per employee in 2025. This amount remains free of tax and social security contributions when granted as a non-cash benefit (vouchers, benefit cards, goods). Important: If exceeded – even by just one cent – the entire amount becomes taxable. Additionally, employers can grant up to €60 tax-free for personal occasions (max. 3x per year).
Which benefits are most popular among employees?
According to the Circula Benefits Report 2025, mobility benefits (Deutschlandticket, mobility budget, company bike) are most popular, followed by flexible working hours and home office options. Company pension schemes, meal allowances, and health and fitness benefits rank next.
How much does a benefit system cost for companies?
Costs vary depending on scope. The tax-free €50 fringe benefit costs €600 per year per employee – without payroll taxes, making it cheaper than a comparable salary increase. Additionally, platform costs of approximately €3-10 per employee per month apply, depending on the provider.
What tax advantages are there for employee benefits?
The main tax advantages are: €50 fringe benefit exemption threshold (§ 8 para. 2 EStG), meal allowance up to €7.50 per working day, unlimited tax-free childcare allowance, internet allowance up to €50 (flat-rate taxed at 25 percent), and health promotion up to €600 per year.
How do I implement a flexible benefit system?
The recommended process: 1) Employee survey to assess needs, 2) Set budget and check tax options, 3) Compare providers (e.g., Benify, Circula, NAVIT), 4) Start pilot phase with one department, 5) Evaluate and adjust regularly.
What is the difference between benefits and salary?
Salary is the regular cash payment that is fully subject to tax and social security contributions. Benefits are additional perks that are often tax-advantaged or tax-free. The advantage: with tax-free benefits, the full value reaches the employees, while a significant portion of a salary increase goes to taxes and contributions.
Conclusion
Flexible employee benefits are a central tool for employee retention and recruiting in 2025. The ability to choose benefits individually increases satisfaction and shows appreciation for different life situations. In terms of taxes, fringe benefits, meal allowances, and other options offer significant advantages over traditional salary increases.
For HR professionals, the effort is worthwhile: a well-structured benefit system strengthens employer branding, reduces turnover, and makes the company more attractive in the competition for skilled workers. Start with an employee survey, utilize the tax options, and evaluate regularly – this is how you create a benefits offering that truly resonates.
Sources
- § 8 EStG – Income (Fringe Benefits). German Federal Ministry of Justice, 2025. https://www.gesetze-im-internet.de/estg/__8.html
- Social Security Remuneration Ordinance 2025. German Federal Government, 2025. https://www.bundesregierung.de
- Federal Ministry of Finance Letter on Fringe Benefit Values. German Federal Ministry of Finance, 2024. https://www.bundesfinanzministerium.de
- § 2 para. 1 No. 10 ZAG – Payment Services Supervision Act. German Federal Ministry of Justice, 2025. https://www.gesetze-im-internet.de/zag_2018/
- IZA Discussion Paper: Flexible Working and Productivity. IZA Institute of Labor Economics, 2020. https://www.iza.org
- Circula Benefits Report 2025. Circula / YouGov, 2025. https://www.circula.com/de/blog/mitarbeiter-benefits
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