Germany – Policy Update on Using Allowances to Boost Assignees’ Salaries

Germany – Policy Update on Using Allowances to Boost

In this GMS Flash Alert we report that on January 8, 2016, the headquarters of Germany’s Federal Employment Agency (FEA) released an update on the possibility of using allowances for boosting the salaries of assignees that come to Germany to work.

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On January 8, 2016, the headquarters of Germany’s Federal Employment Agency (FEA) released an update on the possibility of using allowances for boosting the salaries of assignees that come to Germany to work.  It appears that, in fact, allowances used to boost an assignee’s salary will be considered acceptable when used to help the assignee’s salary meet the so-called comparability requirement.

Employers sometimes augment the assignee’s foreign base salary to bring it up to a comparable salary level (comparable to the local workforce). 

WHY THIS MATTERS

For companies assigning non-EU/EEA/Swiss nationals to Germany from low-wage countries this will be great news.  The change of administrative practice we reported on with our GMS Flash Alert 2016-001 therefore will not become effective.  Typical allowances paid on occasion of an assignment will be considered with regard to a comparable salary as in the past.

Policy and Practice Regarding Assignees’ Salaries

With this e-mailed communication, the FEA’s headquarters revoked the previous statement1 of one its teams and indicated that this team had misinterpreted internal communications2.  The e-mail also included apologies for the confusion caused.  

Only for purposes of complying with the statutory minimum salary requirement, will typical assignment-related allowances (such as per diems, transportation and housing allowances, etc.) not be considered for attaining the requirements under the German Act Regulation on a General Minimum Wage (“MiLoG”).  The previous communication from the FEA had indicated that this approach for the minimum salary requirement would also be applied to the comparability requirement.  According to the newer statement (as referenced in footnote 2) the FEA will consider – as in the past – typical assignment-related allowances for attaining a comparable salary to the local workforce.  Therefore, at this latter stage, boosting salaries in this way will continue to be accepted. 

FOOTNOTES

1  For our prior report, see GMS Flash Alert 2016-001 (January 5, 2016).

2  This e-mail was sent out on behalf of Dr. Manfred Schitzler, Heaquarter of the Federal Employment Agency, Nuremberg (Reference Code: 22 – 5758).  It is considered information that is public and not proprietary or confidential.       

CONTACTS

For additional information or assistance, please contact your local GMS or People Services professional* or one of the following professionals with KPMG Rechtsanwaltsgesellschaft mbH in Germany:

 

Dr. Thomas Wolf  

Tel. +49 (0) 30 530 199 300

TWolf@kpmg-law.com  

 

Sebastian Klaus  

Tel. +49 (0) 69 95 11 95 090   

SKlaus@kpmg-law.com

 

 * Please note that KPMG LLP (U.S.) does not provide immigration services

The information contained in this newsletter was submitted by the KPMG International member firm in Germany. 

© 2016 KPMG AG Wirtschaftsprfungsgesellschaft, a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Flash Alert is an Global Mobility Services publication of KPMG LLPs Washington National Tax practice. The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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