Federal Government provides relief for citizens
In order to take the sting out of rising energy prices, the Federal Government has implemented a package of tax relief. This includes tax improvements such as raising the commuters’ allowance, payments to low-income families and heating cost subsidies. Concerning energy prices, the abolition of the Renewable Energy Sources Act levy is being brought forward. An initial overview:
What support is available for employees?
The employees’ allowance for business-related expenses is to be raised by 200 euros to 1,200 euros. Those in employment can therefore claim for work-related costs up to a value of 1,200 euros without having to submit supporting documents.
The basic personal allowance on income tax is to be raised by 363 euros to 10,347 euros. This aims to partly compensate for fiscal drag in line with the actual 2021 inflation rate and the estimated 2022 inflation rate.
What is the Federal Government doing for commuters?
The commuters’ allowance for long-distance commuters is to be raised (from the 21st kilometre) from 35 to 38 cents. This is aimed at mitigating increased costs of travelling for work due in part to carbon dioxide pricing. The new rules apply from 2022 to 2026 to all forms of transport. You can find more information here and at the website of the
Who is getting the 100 euro one-off payment?
Adults receiving social support payments are to receive a one-off payment of 100 euros. Specifically, this refers to all who receive payments under Social Security Codes (SGB) II or XII, those who draw payments under the Asylum Seekers Payments Law or receive supplementary livelihood support under the Federal War Victims Relief Act. The associated draft law proposed by the Federal Government is currently being discussed in Parliament. The law is planned to come into force on 1 July 2022.
In addition, the governing parties have agreed on a second one-off payment of 100 euros to all adults who are entitled to benefits. A corresponding draft law is currently in preparation to deliver this, which must then be adopted by the Federal Cabinet and passed by the Bundestag.
Is there any additional support for children from low-income families?
From July 2022 a monthly immediate supplement of 20 euros will be disbursed for children receiving payments from the social security system. This also applies to young adults who live in the same household as their parents who are eligible for benefits.
Their eligibility is conditional on the child being eligible for benefits under SGB II, SGB XII, the Asylum Seekers Payments Law or supplementary livelihood support under Federal War Victims Relief Act. Children whose parents receive supplementary child allowance are also eligible. The associated draft law proposed by the Federal Government is currently being discussed in Parliament. The law is planned to come into force on 1 July 2022.
Who is to receive the heating cost subsidy and how much will it be worth?
The heating cost subsidy for households on housing benefits is structured according to the size of the household:
- for one individual 270 euros (instead of 135 euros as per the initial draft)
- up to two individuals 350 euros (instead of 175 euros)
- for each additional individual 70 euros (instead of 35 euros)
For recipients of support under the Federal Training Assistance Act, those receiving Upgrading Training Assistance Act additional payments, and trainees with disability subsidies or education benefits, the heating cost subsidy is worth 230 euros (instead of 115 euros).
Do you have to apply for the heating cost subsidy and when will it be paid?
All those entitled will receive the heating cost subsidy ex officio - i.e. without a separate application. It will be transferred to their accounts in the summer when yearly invoices for heating and additional costs are usually issued.
How many people will be supported through the heating cost subsidy?
The heating cost subsidy will benefit 2.1 million people, including 1.6 million recipients of housing benefits in 710,000 households. Some 370,000 recipients of Federal Training Assistance Act funds will also receive the subsidy, as will around 65,000 trainees on disability subsidies or education benefits who do not live with their parents. Around 75,000 people receiving support under the Upgrading Training Assistance Act will also benefit from the subsidy.
Why can't all consumers receive the heating cost subsidy?
The sharp increase in energy costs is hitting people on lower incomes particularly hard. For this reason, the Federal Government intends to provide assistance with targeted support.
Taxpayers are to benefit from the first relief package, backdated to 1 January 2022. The Renewable Energy Sources Act levy for energy customers is already being dropped from 1 July 2022. The levy is to be abolished permanently from 2023.
The Federal Government is working on other forms of relief. These aim to at least partly compensate for increased costs of energy, food, heating and mobility.
Why do energy customers no longer have to pay the Renewable Energy Sources Act levy?
The Renewable Energy Sources Act levy is currently set at 3.72 cent per kilowatt/hour. It will be abolished from 1 June 2022. The Federal Government has brought forward the planned abolition of the Renewable Energy Sources Act levy by six months from 2023. From 2023 the Renewable Energy Sources Act amendment will permanently abolish the Renewable Energy Sources Act levy. In future it is to be funded from the Federal budget.
What are the components of the price of electricity?
In addition to the administrative costs incurred by the supply companies, the price of electricity chiefly comes from the cost of procuring and distributing electric power, fees for using the grids and state-imposed price components.
The state-imposed components of the price of electricity include VAT, the Renewable Energy Sources Act levy (dropped for customers from 1 June 2022), electricity tax and a concession fee.