Recreation allowance

Employees in companies need regular rest breaks in order to be able to work again in a strengthened and productive manner. Employers can actively contribute to the recreation costs of their employees through the recreation allowance. We show you what options are available and how the allowances are taxed.

Two variants of the recreation allowance

With the recreation allowance, employers can support their employees to recover from their work. The main purpose of rest is to promote the physical and mental health of employees. The allowance can be paid in two different ways.

Variant 1: Holiday allowance as Non-cash benefits and part of salary

In order to regain strength or to maintain health, employees can take advantage of various offers. These range from a one-off trip to an amusement park to a wellness stay lasting several days. If employers support this form of recreation financially, it is a non-cash benefit. This must be taxed as part of the salary. In addition, social security contributions are due for the allowance. In this case, the benefit in kind is taxable income from employment according to §19 paragraph 1 EStG.

Variant 2: Per diem taxed recreation allowance

If companies opt for this option, recreation allowances can be taxed at a flat rate of 25 per cent. The employer pays the taxes. Social security contributions are not due for this variant of the recreation allowance.

It is important that the maximum limits for lump-sum taxation are observed. These are at:

  • 156 euros per year and per employee
  • 104 euros per year for the spouse or registered partner of the employee
  • 52 euros per year per child of the employee.

If these exemption limits are exceeded, wage tax is due on the entire allowance and social security contributions are payable.

However, it is possible to divide the maximum tax-free allowance between several recreational measures. For example, a worker can receive 100 euros for a short holiday in spring and 56 euros in winter. It is crucial that the allowances are provided as a lump sum for the respective measure and that the invoices are not collected by workers over the whole year and then submitted as a package. The tax exemption limits cannot be transferred to other persons. This means that the recreation allowance is provided on a person-by-person basis.


If an employee takes recreational leave and goes to the sea with her two children and partner for recreational purposes, the employer can grant the family up to 364 euros as a recreational allowance tax-free.

Grant for recreation allowance is always earmarked

If companies subsidise their employees with a recreation allowance, this money may only be used for the purpose of recreation. Employees must submit receipts or invoices to the employer. The amount of the receipts must not be less than the amount of the allowance.

For what kind of rest break can employers provide recreational allowance?

Employer aid can relate to very different forms of recreation:

  • Travel: If employees go on a trip to recover from the efforts of a long project, a tax-free employer allowance is possible. Day trips can also be subsidised.
  • Cures or rehabilitation: If employees are recovering from a long illness at a cure or rehabilitation stay, the employer can subsidise this measure.
  • Recovery days and treatments: Wellness stays, massages or other forms of recuperation can be subsidised by the company with the recuperation allowance. This also includes visits to the swimming pool or an amusement park.

In order to receive a recreation allowance, the respective measure must in principle have the purpose of recreation so that it can be subsidised by the employer.

Important requirements for the granting of recreation allowance

  • The allowance is a voluntary benefit provided by the employer. Employees are not entitled to it and cannot claim such an allowance.
  • No formal application must be made for the recreation allowance.
  • The purpose for which the allowance is used (= recreation) must be documented and can be proven in the event of an audit. As a rule, receipts and vouchers are sufficient for this purpose.
  • The payment of the allowance must be in temporal connection with the recreation leave and should not be made later than three months after the leave.
  • If the recreation allowance is calculated via the salary, the allowance must be listed separately from the remuneration.

Who can apply for recreation allowance?

All employees can receive a subsidy towards the cost of a recreational activity. However, they are not entitled to it. The recreation allowance is a voluntary measure by the employer.

Recreation allowance vs. holiday allowance

Unlike the recreation allowance, the holiday allowance must always be taxed. It is a wage component, therefore social security contributions are also due on a pro rata basis.

In the case of the recreation allowance, companies are free to pay it tax-free up to a maximum annual limit or to grant it via wages.

Employees may use the holiday allowance for any purpose, while the recreation allowance may only be used for the purpose of recreation.

Important: Holiday allowance and recreation allowance may be paid in parallel. They are not mutually exclusive and are a voluntary benefit provided by the employer.

Alternatives to the recreation allowance

In order to encourage employees to take more rest, companies can also motivate them to take part in sports programmes and exercise more through workplace health promotion. Companies have the option of granting up to 600 euros per year tax-free for workplace health promotion, e.g. for sports courses or the gym.

If it is a matter of restoring the ability to work, employers can also support their employees tax-free with up to 600 euros per year.

In addition to these possibilities, employers can also support their employees with other benefits. Circula gives companies the opportunity to activate tax-optimised subsidies via a mobility budget or a meal allowance simply by using an app, without much administrative effort.

We make employees benefit

From travel expenses to per diems and employee benefits – try out the all-in-one-app for employee finance.