Entgeltumwandlung
Entgeltumwandlung (§ 40 Para. 2 Sentence 2 No. 1 EStG) is a salary conversion model where employees exchange gross salary for a job ticket, saving on taxes and social security. For employers, the model is cost-neutral – and can even generate a financial gain.
What is Entgeltumwandlung?
Entgeltumwandlung (salary conversion) refers to an employee giving up part of their gross salary in exchange for a non-cash benefit – for example, a job ticket. The converted amount is exempt from social security contributions; the employer takes on the flat-rate tax of 15%.
The result: the employee's net income decreases significantly less than the gross amount waived – because taxes and social contributions on that portion are eliminated. For the employer, the reduction in the social-security-liable payroll generates savings that exceed the flat-rate tax cost.
Legal basis: § 40 Para. 2 Sentence 2 No. 1 EStG (flat-rate taxation at 15%)
BMF letter: 15 August 2019 (ref. IV C 5 – S 2342/19/10007:001), updated 7 November 2023
How does the model work?
For a job ticket via salary conversion, the process works as follows:
- Gross salary is reduced: The employee waives €63.00 of their monthly gross salary (full ticket price, without the 5% business discount – this maximises the employer's social security savings).
- Ticket provided free of charge: The Germany Ticket is provided via Jobticket+ – the employee pays nothing out of pocket for the ticket.
- Flat-rate tax paid by employer: The employer taxes the converted amount at a flat rate of 15% (plus church tax and solidarity surcharge) – this tax is borne by the employer.
- Social security savings for employer: By reducing the social-security-liable payroll, the employer saves their share of social security contributions.
Key figures at a glance
Sample calculation: Bavaria · €3,000 gross salary · Tax class I · with church tax. Figures are indicative.
For the employee
| Item | Amount |
|---|---|
| Gross salary waived | €63.00/month |
| Effective net cost | €37.67/month |
| Advantage vs. private purchase (€63) | €25.33/month |
| Annual advantage | approx. €304/year |
| With Pause Button (avg. 1 month/year) | €36.82/month (effective) |
For the employer
| Item | Amount |
|---|---|
| Social security savings (approx. 20.5%) | +€12.92 |
| Flat-rate tax (15% + church tax + soli) | −€10.21 |
| Jobticket+ service fee | −€1.00 |
| Effective total cost | +€1.71 gain |
The model is not just free for employers – it generates a financial surplus of approx. €1.71 per employee per month.
Effect on the commuter allowance (Entfernungspauschale)
Under the salary conversion model (§ 40 Para. 2 S. 2 No. 1 EStG), the employee's deductible commuter allowance (Entfernungspauschale) is reduced by the flat-taxed amount – i.e. by €63.00 per month.
If the employee's actual commuting costs (as measured by the commuter allowance) exceed this amount, the difference can still be claimed as a work-related expense (Werbungskosten) in their income tax return.
For comparison: With the 100% employer subsidy model, the commuter allowance is only reduced by €59.85 (the discounted ticket price). With Split Pay, only by €15.75 (the employer's portion). Salary conversion has the highest reduction, but also the greatest social security benefits.
Employment contract amendment (Zusatzvereinbarung)
Salary conversion requires an addendum to the employment contract (Zusatzvereinbarung zum Arbeitsvertrag) – a legally required document that formalises the employee's gross salary waiver in writing.
With Jobticket+, this agreement is fully automated – generated and digitally signed within the platform. No paperwork, no manual HR effort.
Savings from the Pause feature
The Pause button in Jobticket+ lets employees pause their ticket during holiday or remote-work months. Based on real usage data: 27% of employees pause for an average of 1 month per year.
- Employee: Effective monthly cost drops from €37.67 to €36.82 (the salary waiver is skipped in the pause month)
- Employer: Monthly gain per pausing employee is approx. €1.68 (slightly reduced, as the social security saving doesn't apply in the pause month)
Mobility vouchers (MILES, Bolt, TIER, Dott)
In addition to the job ticket, employees receive through Jobticket+ monthly vouchers worth approx. €10 for last-mile mobility (MILES, Bolt, TIER, Dott).
These vouchers qualify as non-cash benefits under § 8 Para. 1 Sentence 3 EStG and are free from tax and social contributions – as long as the monthly threshold of €50 is not exceeded. Since the vouchers are only €10/month, they are fully tax-free.
Special rule: Mini-Jobbers (marginal employees)
For marginal employees (Mini-Jobber), salary conversion is not applicable, as it could violate the earnings limit (€556). Instead, the base cash salary is reduced by the value of the employer subsidy (following the "100% subsidy" or "Split Pay" model), keeping total compensation within the threshold.
Comparison of the three models
| Feature | 100% Subsidy | Salary Conversion | Split Pay |
|---|---|---|---|
| Legal basis | § 3 No. 15 EStG | § 40 Para. 2 S. 2 No. 1 EStG | § 3 No. 15 EStG |
| Employer cost | €60.85/month | +€1.71 gain | €16.75/month |
| Employee cost | €0 | €37.67/month | €44.10/month |
| Ticket price (basis) | €59.85 (with 5% discount) | €63.00 (without discount) | €59.85 (with 5% discount) |
| Commuter allowance ↓ | €59.85/month | €63.00/month | €15.75/month |
| Contract amendment required | No | Yes (automated via Jobticket+) | No |
| Suitable for mini-jobbers | Yes (with adjustment) | No | Yes (with adjustment) |
Implementation with Jobticket+
Jobticket+ by TicketPlus+ automates the entire salary conversion process:
- ✅ Digital contract amendment – automatically generated and digitally signed
- ✅ HR integration – direct connection to 50+ HRIS systems (Personio, SAP, Workday, BambooHR, and more)
- ✅ Automated onboarding/offboarding – no manual HR work
- ✅ Collective invoice – clear monthly billing for your accounting team
- ✅ Pause button – employees can pause their ticket flexibly
- ✅ Instant ticket issuance – employees see the ticket in the app immediately after sign-up
Setup: under 5 minutes – no IT knowledge required. Ticket issued to employees in 30 seconds.
Register for free and introduce salary conversion →
⚠️ Disclaimer: This article provides a general overview only and does not constitute tax advice. For the specific implementation in your company, a tax advisor (Steuerberater) should always be consulted. All calculations are based on the example: Bavaria, €3,000 gross salary, tax class I, with church tax. Individual results may vary.