How is group accident insurance for employees taxed in Germany?
In short
How group accident insurance for employees is taxed in Germany depends on who may claim. If employees have their own claim, the premium is taxable salary, but the employer can pay the wage tax at a flat 20 percent plus solidarity surcharge and church tax. Since 2024 there is no EUR 100 cap per head. If only the employer can claim, tax arises only when a benefit is paid out.
IT company, 50 or more insured, EUR 100,000, worldwide 24-hour cover
premium about EUR 70, flat tax about EUR 15
IT company, 10 insured, same cover
premium about EUR 182, flat tax about EUR 38
One single insured person, same cover
premium about EUR 326, no flat rate possible
Tax amounts are our own calculation at 20 percent wage tax plus 5.5 percent solidarity surcharge
on it, without church tax.
Premiums from published examples, as of October 2026; your premium depends on activities,
sums and group size.
Worked example
Start-up in Berlin with 12 employees and a direct claim
The employer pays a premium of EUR 90 per head including insurance tax and covers the wage tax at the flat rate.
Total premium (12 × EUR 90)
EUR 1,080
Flat wage tax 20 percent
EUR 216
Solidarity surcharge 5.5 percent of the wage tax
EUR 11.88
Church tax
a surcharge on the wage tax depending on the federal state
About EUR 1,308 a year plus church tax, roughly EUR 109 per employee. Nothing is deducted from the employees' payslips.
Direct claim or employer claim
For the tax treatment of group accident insurance in Germany, one question decides everything: may the employee claim the benefit from the insurer personally? German advisers call this a direct claim (Direktanspruch). If it exists, every premium payment counts as taxable salary.
If the policy says only the employer may exercise the rights, the premium is not salary when paid. Tax arises later, only if money actually reaches the employee. You find this in the policy wording, usually in a clause on who exercises the rights.
Structure
When is it taxed
How
Employee has a direct claim
with every premium payment
flat 20 percent or individually through payroll
Only the employer exercises the rights
when a benefit is paid to the employee
premiums paid so far count as salary, capped at the benefit
Only one employee insured
with every premium payment
individually, the flat rate is not available
The flat tax since 2024
Until the end of 2023, group accident insurance could only be flat-taxed if the average premium per employee, excluding insurance tax, was at most EUR 100 a year, and EUR 62 before 2020. The Growth Opportunities Act (Wachstumschancengesetz) of 27 March 2024 abolished this cap retroactively from 1 January 2024.
Today section 40b(3) EStG only requires several employees to be insured together in one accident policy. That makes higher sums, progression or an accident pension possible without losing the flat rate, which is good news for employers using group accident insurance as a benefit.
The EUR 50 monthly allowance for benefits in kind does not help here: German tax authorities treat the group accident premium as cash salary, not as a benefit in kind.
Payouts without a direct claim
If only the employer holds the rights, the group accident premium stays tax-free at first. When money reaches the employee after an accident, the premiums paid for that person so far become taxable salary, capped at the amount paid out. The Federal Fiscal Court (Bundesfinanzhof) decided this in 2008, and the Federal Ministry of Finance adopted it in a 2009 circular.
Only the premiums the current employer paid for that employee are captured, at the time of the payout. Premiums paid by earlier employers do not count.
Business travel share
If the group accident policy covers both work and leisure, part of the premium relates to the work risk. Under the 2009 ministry circular, the share for accidents on business trips can be treated as a tax-free travel expense refund. Insurers state the work share on request.
This split is mainly worth the effort for companies with many travelling staff. For an office team, the paperwork usually costs more than it saves, so the whole premium is flat-taxed.
How the payout is taxed for the employee
If the employee has a direct claim and the group accident premiums were already taxed, a one-off disability or death benefit is generally free of income tax. A regular accident pension is generally taxed only on its income portion (Ertragsanteil).
Without a direct claim, it is not the payout that counts as salary but the premiums captured retroactively. For the employee that is usually a small amount compared with the benefit.
When the flat rate does not work
If you insure only one employee, you cannot use the flat rate, because section 40b EStG requires several insured persons in one policy. The group accident premium then runs through payroll individually, with wage tax and social security.
A structure without a direct claim can make sense where premiums are high and claims rare. The downside: the employee cannot claim personally and depends on the employer passing the money on.
Step by step
Check the policy wording to see whether employees have a direct claim.
Make sure several employees are insured in one joint policy.
Decide with your tax adviser or payroll provider: flat rate or individual taxation.
With many business trips, ask the insurer for the work-related share of the premium.
Without a direct claim, record how premiums will be taxed if a benefit is paid.
If anything is unclear, request a binding payroll ruling from your tax office.
Checklist
Clause on who exercises the rights has been read
At least two employees in the same policy
Premium paid on top of salary, not through salary sacrifice
Flat tax recorded in the payroll account
Premium share per employee documented in case of later taxation
Common mistakes
Still working with the old EUR 100 cap and therefore choosing low sums
Treating the premium as a benefit in kind under the EUR 50 allowance, although it is cash salary
Forgetting the retroactive taxation when a benefit is paid without a direct claim
Insuring a single employee and still applying the flat rate
Questions and answers
Frequently asked
Does the EUR 100 cap for group accident insurance still apply in Germany?
No.
The Growth Opportunities Act removed it retroactively from 1 January 2024.
Now all that counts is that several employees are insured together in one policy.
Do employees pay tax on the group accident premium themselves?
Not if the employer covers the tax at the flat rate.
The company then bears the 20 percent plus surcharges, and the payslip does not change.
Is flat-taxed group accident insurance free of social security contributions?
Yes, if it is paid on top of salary.
That follows from section 1 of the Social Security Remuneration Ordinance (SvEV).
Can the company deduct the premiums?
Yes.
Group accident premiums and the flat tax paid by the employer are business expenses.
What if only the employer may claim the benefits?
Then the premium is not salary when paid.
Only when a benefit reaches the employee are the premiums paid so far taxed as salary,
capped at the benefit.
I am an expat employee. Do I need to declare anything in my tax return?
Usually not for a flat-taxed premium, because the employer has already settled the tax.
If you receive an accident pension, it belongs in your return.
