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The recent tripartite meeting on energy resulted in a set of unprecedented measures, some designed to benefit everyone, others targeted at low-income households in particular.
During last month’s tripartite meeting, negotiating parties settled on capping gas and electricity prices and on subsidising fuel oil and pellets. This public aid is designed to benefit everyone, same as the reduction in value-added tax.
In addition to this, there are also a number of targeted aids to benefit low-income households in particular. Here is all you need to know on the matter.
The deadline to apply for the cost-of-living and energy allowances was recently extended to 31 October. More than 31,000 households had already requested this form of assistance by the end of August this year.
These aids are designed for people of low-income. The amount of money depends on the composition of the household. To be eligible, single people may not earn more than €2,258.83 per month, which is actually below the minimum wage for unqualified personnel, currently fixed at €2,313.38.
Asked about this, the relevant department explained that these grants were still adjusted to the old minimum wage because it is the annual household income over the last twelve months that has to be attached to the application. Therefore, the limit will also be adjusted alongside the next increase.
For a household of four people, the cost-of-living allowance can amount to almost €3,000, to which the €350 energy allowance can be added. However, the combined household income must not exceed €5,000 gross per month to qualify for the cost-of-living allowance. In contrast, the gross monthly income limit for the energy allowance is set at €6,000 for a household of four people.
The intent of the energy tax credit, or CIE, is to compensate for the July index cut, so to speak. Unlike the index, however, there is a limit to the maximum amount of annual income to be eligible for the credit. This limit is set at around €100,000 gross per year.
For a monthly gross salary of €5,000, the CIE will amount to about €78.66, whereas the 2.5% indexation of the gross salary would have represented €125. For minimum wage recipients, however, the CIE is more profitable than the indexation.
This type of credit, which must be requested, is intended for single parents raising children on their own. The single-parent tax credit is set at €1,500 per year if the taxpayer’s annual income is €35,000 or less. The CIM varies gradually from €1,500 to €750 per year if the annual income is between €35,000 and €105,000.
It should be noted that any alimony paid by the other parent is included in the calculation.
During the presentation of the latest budget proposal, Minister of Finance Yuriko Backes announced that this tax credit will be increased: “In the future, it will be €2,505 for annual incomes of €60,000 or less and then it will gradually decrease. This represents a bonus of up to €1,000 euros per year.”
This is another measure announced at the last tripartite meeting. The reduction will apply to various rates with the exception of the super-reduced VAT rate of 3%, which will remain unchanged. It will come into force on 1 January 2023.
To illustrate, for the purchase of a €50,000 car with a VAT rate of 16% instead of 17%, savings will be around €500.
The rent subsidy was revalued on 1 August 2022 and can now amount to €400 per month. For example, a household with two children and a monthly income of less than €6,400 is entitled to a maximum subsidy of €360 per month. Here, the net income is taken into account.
For households that already benefited from a rent subsidy, the amount was automatically increased as of 1 August.
At present, the monthly minimum wage for unskilled workers is set at around €2,313.38, the one for skilled personnel at €2,776.05. From 1 January 2023, these amounts will be increased by €76.34 and €91.61, respectively.
With the 3.3% increase, the unskilled minimum wage rises to €2,389.72 and the skilled one to €2,867.66.
The minimum wage is continuously adjusted. In 2014, the unskilled minimum wage was €1,921.03 per month. This means that it has risen by 24.4% if the upcoming January increase is taken into account.
In 2014, the square-metre price for a new flat was on average around €4,600, it is currently €8,600. This corresponds to an increase of almost 87%. For rental properties, the increase is just over 40%.