Tax Clas­si­fic­a­tion M

Since 1 January 2019, the Travel Office has been required to report tax classification M to the Dusseldorf State Office for Salaries and Pensions (LBV Düsseldorf) for any employee who receives a free meal when working off-site, so that this can be entered into their salary and tax statement for the current year.

This requirement arises from the following excerpt from the letter issued by the German Federal Ministry of Finance (BMF).

The original letter from the German Federal Ministry of Finance can be found here.

Extract from the BMF letter on the reform of the tax law on travel expenses, dated 27 September 2017 Obligation to declare tax classification “M”

“M” must be declared if the employee has, on the occasion of or during off-site work or within the scope of maintaining two households due to business reasons, been provided with a free meal either by the employer or by a third party at the employer’s request, which must be assessed at the official rate for benefits in kind under Section 8(2) sentence 8 of the German Income Tax Act (EStG). This classification must be entered irrespective of whether the meal subject to taxation under Section 8(2) sentence 9 of the German Income Tax Act (EStG) was taxed, or whether the employer taxed the meal individually or based on a flat-rate according to Sec. 40(2) sentence 1 Number 1(a) EStG.

Furthermore, with regard to reporting the capital letter “M”, the guidelines specified in margin no. 90 et seq. in the supplementary letter by the German Federal Ministry of Finance (BMF) dated 24 October 2014 (BStBl I page 1412) on the reform of the tax law on travel expenses as of 1 January 2014, must also be complied with.

The period of transition for the technical implementation provided for in margin no. 92 of the above-mentioned BMF letter will expire on 31 December 2018. As of 1 January 2019, "M" is to be entered in accordance with the rules provided above.