Corporate Travel
Wellness-Trips
company outing company expense
Company outing as a business expense: Save taxes & boost employee motivation!
Planning an unforgettable company outing without breaking the budget? The tax treatment of company outings can be complex. This article explains the key rules and shows you how to make the most of the benefits. Need support with planning and tax optimisation? Get in touch with us!
The topic, briefly and concisely
Company outings are deductible business expenses, but the 110-euro tax exemption per employee must be observed to minimize the tax burden.
The correct calculation of the 110-euro allowance is crucial, as costs for companions can affect it. The flat-rate taxation can simplify the taxation of non-cash benefits.
Make the most of the two-event rule and pay attention to the input tax deduction. Careful planning and documentation are essential for boosting employee motivation while also saving on taxes.
Learn how to optimise company outings for tax purposes while also boosting employee motivation. Avoid pitfalls and make the most of all the benefits!
A corporate outing can be more than just a pleasant day out. It is a valuable tool for employee motivation and team building. But how can you make optimal use of these benefits while simultaneously saving on taxes? This guide provides you with a comprehensive overview of the tax treatment of corporate outings in Germany.
What are corporate outings and why are they important?
Definition and distinction
In a tax context, a corporate outing is an event that primarily serves the company and involves all or most of the employees. The aim is to improve the working atmosphere and foster cohesion. It is important to distinguish these from purely business meals or events for individual employees, which are treated differently.
The importance of corporate outings for the company
A well-organised corporate outing can work wonders. It strengthens the team spirit, improves communication, and boosts employee motivation. It also offers a welcome change from the daily work routine and can foster creativity. Not to mention the tax advantages which can be utilised as business expenses. You can find inspiration for your next event here.
At GoTuro, we specialise in organising unforgettable and tax-optimised corporate outings. Our expertise helps you make the most of your budget while sustainably increasing employee motivation. Learn more about our tailored offerings.
Make optimal use of the €110 exemption for your business expenses
The tax treatment of company outings is based on two pillars: deductibility as a business expense and the €110 allowance per employee. Both aspects are crucial for minimizing costs and maximizing benefits.
Company outings as deductible business expenses
In principle, the expenses for company events, including company outings, are deductible as business expenses. This means you can deduct the costs from your profits and thus reduce your tax burden. Unlike entertainment expenses, there is no 70% restriction, as confirmed by the IHK Karlsruhe. This is a significant advantage.
The crucial €110 allowance per employee
A key point is the €110 allowance per employee and event. This amount includes all costs that benefit the individual employee during the company outing. It is important to understand what is included in this allowance and how it differs from an exemption limit. Haufe.de explains the details.
What the allowance includes: A detailed breakdown
The allowance includes food, beverages, accommodation, travel expenses (with exceptions), entry fees, gifts, and other benefits. It is advisable to create a detailed cost breakdown to keep track and make the most of the allowance. Note that VAT is also included in the calculation.
Allowance vs. exemption limit: The subtle but important difference
The difference between an allowance and an exemption limit is crucial. With an allowance, only the amount over €110 is taxed, while with an exemption limit, the entire amount is taxed if the limit is exceeded. In the case of company outings, the €110 amount counts as an allowance for income tax, but as an exemption limit for input tax, as Lexware highlights. This affects the input tax deduction.
Costs for accompanying persons affect the 110-euro allowance
The correct calculation of the 110-euro allowance is essential to avoid unwanted tax consequences. Various cost factors play a role here, which must be taken into account.
Inclusive and Exclusive Cost Factors
The allowance includes all direct costs incurred in connection with the company outing: food, drinks, room rental, entrance fees, transportation costs, etc. Internal costs such as payroll, depreciation, or energy costs are not included. A detailed breakdown of all costs is therefore essential.
The Role of Accompanying Persons (Partners, Children)
It is particularly important to consider accompanying persons such as partners or children. The costs for accompanying persons are attributed to the respective employee. There is no additional allowance for accompanying persons. This can lead to the 110-euro allowance being exceeded more quickly. Steuer-Wick.de advises considering this in planning.
Example Calculations for Clarification
Scenario 1: Costs below 110 Euros
Assuming a company outing costs 80 euros per employee. In this case, the amount remains below the allowance, and no taxes are incurred. The costs can be deducted as operating expenses.
Scenario 2: Costs over 110 Euros – Implications and Options
If the company outing costs 150 euros per employee, the difference of 40 euros becomes taxable. The employer has the option to either tax this amount individually or choose the 25% flat rate tax. The advantage of flat-rate taxation is that it is free from social security charges.
At GoTuro, we support you in detailed cost planning and calculation to make the most of the 110-euro allowance. Contact us for individual advice.
Two company outings per year maximise your tax benefits
The frequency of company outings directly impacts their tax treatment. The so-called two-event rule applies, which you should be aware of to optimise your tax benefits.
The Two-Event Rule
Each calendar year, a maximum of two company outings per employee can receive tax benefits by using the 110-euro allowance. But what happens if you organise more than two events? In this case, the employer has the option to decide which two events qualify as 'usual' and thus receive the allowance. The costs for the third event are then fully taxable. IHK Bonn provides information.
Departmental Outings: What to Consider?
Departmental outings can also receive tax benefits, provided all employees of the respective department are able to participate. It is important that no employees are excluded to take advantage of the allowance. Equal treatment of all employees in a department is therefore essential.
At GoTuro, we ensure that your company outings meet tax regulations while also boosting employee motivation. Benefit from our expertise and plan your next incentive trips with us.
Flat-rate taxation simplifies the taxation of non-cash benefits
If the 110 euro allowance is exceeded, the question of taxing the monetary benefit arises. There are various options that you should be aware of.
Individual Wage Taxation vs. Lump-Sum Taxation
Basically, the monetary benefit can be either taxed individually through the payroll or the employer chooses the 25% lump-sum tax. Lump-sum taxation is often the simpler and more attractive solution as it comes with some benefits.
The 25% Lump-Sum Tax: An Easy Solution
The 25% lump-sum tax offers a straightforward way to tax the monetary benefit. In addition to the lump-sum tax, there is also the solidarity surcharge and possibly church tax. The major advantage: The lump-sum tax leads to exemption from social security contributions for the lump-sum taxed amount. PKF Fasselt explains the details.
When is Each Option Sensible?
The lump-sum tax is especially sensible when the employee's individual tax rate is higher than 25%. Moreover, social security contributions are eliminated, making the lump-sum tax attractive for the employer. For lower individual tax rates, individual taxation might be more advantageous.
We at GoTuro are happy to advise you on choosing the optimal tax option. Contact us for a personal consultation.
Reimburse travel expenses for the company outing tax-free
In addition to the 110-euro allowance, there are other special cases and exceptions that are relevant to the tax treatment of company outings. These include travel expenses, gifts, and anniversary celebrations.
Travel expenses for company outings: A tax-free option
If the company outing does not take place at the employee's primary place of work and the employee organizes their own travel, travel expenses can be reimbursed tax-free. This travel reimbursement is not counted towards the 110-euro allowance. This is an attractive way to reduce costs for the employee. The IHK Karlsruhe points this out.
Gifts as part of the company outing
Gifts given as part of the company outing generally count towards the 110-euro allowance. However, there is an exception for gifts in kind up to 60 euros (including VAT). These can be given in addition to the allowance, provided they are not cash gifts.
Anniversary celebrations vs. company events
Anniversary celebrations, where an individual employee is honoured, are not considered company events. Here, gifts in kind up to 110 euros can be granted. However, this is a threshold, not an allowance. If the limit is exceeded, the entire amount is taxable.
We at GoTuro help you make the most of all special cases and exceptions. Contact us for individual advice.
Input VAT deduction for company outings: Observe the 110 euro limit
VAT also plays an important role in company outings. In particular, input tax deduction is an issue that must be taken into account.
Input Tax Deduction: When is it possible, when not?
The input tax deduction for expenses related to company events is only possible if the costs per employee do not exceed 110 euros. If this limit is exceeded, the input tax deduction is completely forfeited. This means that the 110-euro limit is relevant not only for payroll tax but also for VAT. Lexware highlights this.
BFH Rulings on Input Tax for Company Events (V R 16/21)
The Federal Fiscal Court (BFH) has clarified in several rulings that the input tax deduction is only possible if the expenses are predominantly business-related. This is generally the case if the costs per employee are under 110 euros. For higher costs, the BFH assumes a predominantly private motivation, which excludes input tax deduction. The BFH ruling of 10 May 2023 - V R 16/21 is particularly relevant here.
Documentation and Proof Obligations
To claim the input tax deduction, comprehensive documentation of all costs and participants is required. Participant lists are important proof for the tax office. Invoices must also be detailed and include all relevant information.
We at GoTuro support you in correct documentation and help you make optimal use of the input tax deduction. Contact us for individual consultation.
Budget planning and participant lists for tax-optimized company outings
Careful planning is key for a successful and tax-optimized company outing. Here are some practical tips and recommendations that you should consider when planning.
Cost Control and Budget Planning
The 110-euro limit should always be kept in view during budget planning. It is advisable to create a detailed budget and take all cost factors into account. Unexpected expenses should also be factored in to avoid unexpectedly exceeding the limit.
Documentation of All Costs and Participants
Comprehensive documentation of all costs and participants is essential. Participant lists, invoices, contracts – everything should be carefully kept to be able to present all evidence in case of an audit by the tax office. Lexware recommends having the participant list signed by all participants.
Early Planning and Communication with Employees
Early planning makes it possible to find the best deals and consider all tax aspects optimally. Communication with employees is also important. Inform your employees about the planned activities and the tax framework conditions.
Key Benefits of [Topic]
Here are some of the key benefits you'll gain:
Benefit 1: Taking advantage of tax benefits
Benefit 2: Increasing employee motivation
Benefit 3: Promoting team building
At GoTuro, we support you in the entire planning and organization of your company outing. From budget planning to execution – we are your competent partner. Contact us for a no-obligation offer.
Company outings promote a positive workplace atmosphere and save on taxes
More useful links
The IHK Karlsruhe provides information on the tax treatment of company events.
Haufe.de explains the details of the exemption limit for company events.
Lexware highlights aspects of VAT deduction related to company parties.
Steuer-Wick.de offers advice on the tax treatment of company events and gifts.
The IHK Bonn provides information on the two-event rule for company outings.
PKF Fasselt explains the details of the tax treatment of company events.
FAQ
What exactly counts towards the €110 allowance per employee?
The €110 allowance includes all costs that benefit the individual employee in the context of the company outing, including food, drinks, accommodation, travel expenses (with exceptions), entrance fees, gifts and other benefits. The VAT is also included in the calculation.
What is the difference between an allowance and an exemption limit?
With an allowance, only the amount over a certain limit is taxed, whereas with an exemption limit the entire amount is taxed if the limit is exceeded. In the context of company outings, the €110 is an allowance for income tax, but an exemption limit for VAT.
How do accompanying persons affect the €110 allowance?
The costs for accompanying persons (partners, children) are attributed to the respective employee. There is no additional allowance for accompanying persons. This may result in the €110 allowance being exceeded more quickly.
What happens if the costs per employee exceed the €110 allowance?
If the €110 allowance is exceeded, it creates a taxable benefit in kind. The employer can either tax this amount individually or choose the 25% flat-rate tax. The flat-taxation leads to the flat-taxed amount being exempt from social security contributions.
How many company outings per year can be tax-advantaged?
A maximum of two company outings per employee can benefit from tax advantages per calendar year by using the €110 allowance. Additional events are subject to taxation.
Can departmental outings also benefit from tax advantages?
Departmental outings can also benefit from tax advantages, provided that all employees of the respective department can participate. There must be no discrimination.
Can travel costs for the company outing be reimbursed tax-free?
If the company outing does not take place at the employee's primary workplace and the employee organises the travel themselves, the travel costs can be reimbursed tax-free. This travel reimbursement is not counted towards the €110 allowance.
When is VAT deduction possible for company outings?
The VAT deduction for expenses related to company events is only possible if the costs per employee do not exceed €110. If this limit is exceeded, the VAT deduction is entirely forfeited.
