Muss die Pauschalversteuerung nach § 37b EStG beantragt werden?

No. The flat-rate taxation under Section 37b of the Income Tax Act (EStG) takes effect immediately without the need to file an application, at a fixed rate of approximately 30 percent and up to 10,000 euros per person.

Is it necessary to apply for the flat-rate taxation under Section 37b of the Income Tax Act (EStG)?

No—and that is precisely the greatest practical advantage of this option. The flat-rate taxation under Section 37b(2) of the Income Tax Act (EStG) can be applied without a formal application process, even during the fiscal year and on short notice.

This makes it the obvious choice when a supplemental health insurance plan is set to start in the next quarter and there isn't enough lead time for an application process—or when an existing benefit unexpectedly reaches its coverage limit and a solution is needed quickly.

How the load is composed

The flat rate is 30 percent of the grant. Added to this are the solidarity surcharge on the flat-rate tax and the flat-rate church tax, the rate of which varies by federal state. Mathematically, this results in an effective tax burden of about one-third.

The main drawback

The contribution remains subject to social security taxes, both on the employer's and the employee's side. For cost accounting purposes, this means that the flat-rate tax and the employer's share of social security contributions are added to the contribution.

For employees, their own contribution reduces the net amount—so the benefit is not received in full, a fact that requires explanation when communicating with the workforce. This is precisely what distinguishes it from the flat-rate allowance under Section 40(1) of the Income Tax Act (EStG), which is also exempt from social security contributions.

Broad Scope of Application

Maximum amount of 10,000 euros per recipient per year — practically never the limiting factor
Not limited to the company's own employees, unlike § 40(1) of the Income Tax Act (EStG)
Fixed rate, making it predictable over the term

One point before the decision

The right to vote cannot be divided arbitrarily. If the company provides additional benefits in kind, the implications for these benefits should be discussed with the payroll department—they may affect the overall calculation.