Cryptocurrencies such as Bitcoin are becoming increasingly popular. While cryptocurrency was only traded sporadically in the beginning, some of the currencies have now become firmly established. Making payments using cryptocurrency is possible in many places in Germany. But are German employers also allowed to pay their employees in cryptocurrency?
General principle in Germany: wages in euros
The law (Section 107 (1) of the German Trade, Commerce and Industry Regulation Act (GewO)) provides that the employer shall pay the remuneration to the employee in euros. This is so that the employee can cover his/her living expenses from the payment of wages. If the employer pays the salary in another currency, the employee’s claim to remuneration is not fulfilled. The employee may therefore continue to claim remuneration. Exceptions are permitted, for example, if the employee is abroad and the remuneration is paid in the respective foreign currency.
Cryptocurrency as an exception?
Cryptocurrencies could be a potential substitute due to their international validity. However, this fails due to Section 107 (1) GewO. The exception regarding payment in foreign currency only includes those currencies that are protected by a sovereign state and legitimized and accepted by it as a means of payment. Thus, the payment of the entire salary in cryptocurrency is not possible.
Cryptocurrency as remuneration in kind
Nevertheless, in Germany it is permissible to pay out part of the salary as so-called remuneration in kind. Payments in kind are, however, subject to certain restrictions. For example, benefits in kind may only be provided at cost price. This means that the employer cannot make a profit by granting benefits in kind. Likewise, the granting of the remuneration in kind must be in the interest of the employee. It is not possible to give a general answer as to when exactly this is the case, but rather it must be assessed separately depending on the individual case.
In addition, when granting remuneration in kind, it should be noted that the non-seizable portion of the wage (currently EUR 1,178.59 for employees without alimony obligations) must be paid in euros. However, this does not answer the question of whether wage components exceeding this amount may be paid out in cryptocurrency.
Avoiding double payment of wages
Employers who wish to pay out cryptocurrency as remuneration are advised to be cautious, as this does not redeem the employee’s claim to wages. This would result in the wage having to be paid twice under certain circumstances.
It always depends on the individual case which part of the salary can be paid out as remuneration in kind and thus in the form of cryptocurrency. As a rough guideline, the current assumption is around 25 percent of total remuneration, although other percentages are conceivable depending on the individual case.
WINHELLER helps with the drafting of employment contracts
You would like to pay your employees’ wages in cryptocurrency? We will be happy to assist you with the drafting of employment contracts, including those regarding remuneration in cryptocurrency.
Employment contracts for employees working in Germany