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company outing cost per employee
Company outing: Avoid cost explosion – Here's how to save per employee!
Planning an unforgettable company outing without breaking the bank? The tax regulations can be complex, but don't worry! We'll show you how to make the most of the allowances and avoid unexpected cost traps. Discover clever strategies now and learn more in our personal consultation.
The topic, briefly and concisely
The €110 allowance per employee for up to two company outings annually reduces costs and enhances team spirit. Use this benefit to offer your employees unforgettable experiences.
The correct calculation of costs, including VAT and companions, is crucial to make optimal use of the allowance and avoid unexpected tax payments. Careful documentation is essential in this regard.
By applying the flat-rate taxation on monetary benefits when exceeding the 110-euro limit, you can minimise the tax burden for your employees and enhance the attractiveness of your company. This can increase employee motivation by up to 20%.
Find out how to optimally structure the costs of your company outing per employee for tax purposes while creating unforgettable experiences. Get informed now!
Tax Basics of Company Outings
A company outing is more than just a pleasant get-together; it is an important tool for strengthening team spirit and employee motivation. But what constitutes a company outing in tax terms? And how can you optimise the costs per employee? We at GoTuro, your experts for unforgettable travel experiences, show you how to take advantage of tax benefits to make the most of your budget while offering something special to your employees. Our party trips and incentive trips are perfectly suited to provide your employees with unforgettable experiences without breaking the bank.
What is a company outing in tax terms?
In tax terms, a company outing is an employer-sponsored event for its employees. The aim is to improve the working atmosphere and foster community. A company outing differs from other company events such as Christmas parties or anniversary celebrations by focusing on joint activities and experiences outside the workplace. It is important that participation is fundamentally open to all employees to take advantage of tax benefits. The IHK Karlsruhe offers detailed information on this.
The tax allowance of 110 euros
A key aspect of planning a company outing is the cost. This is where the tax allowance of 110 euros per employee and event comes into play. This allowance covers many costs associated with the outing: transport, catering, entrance fees, accommodation and even gifts up to a value of 60 euros. This allowance applies to a maximum of two events per calendar year. It is important to note that this amount is understood to include VAT. Further details on the allowance can be found at Tagewerk Events.
Why the participation of all is important
To be able to use the tax allowance, it is crucial that the invitation to the company outing is non-discriminatory. This means that all employees (or all members of a specific department) must be invited, regardless of their position, salary, or length of service. If not all employees are invited, this can have a negative impact on the tax allowance. Therefore, it is important to create an inclusive and appreciative atmosphere where all employees feel welcome. At GoTuro, we ensure that our offerings are accessible and appealing to all employees. Our company outings for large groups are designed so that everyone has a great time.
VAT and accompanying persons affect the 110-euro limit
The £110 threshold in detail
The £110 threshold is an important factor when planning your company outing. It is crucial to know exactly what is included in this calculation and what is not. This is the only way to ensure that you make optimal use of the tax allowance and avoid unexpected tax payments. The Haufe Finance Office Premium provides detailed information on this.
What is included in the calculation
When calculating the costs per employee, you must take into account all expenses directly associated with the company outing. This not only includes obvious costs such as transport and catering but also admission fees, potential accommodation costs, and gifts. It is important to keep all invoices and receipts carefully to be able to prove costs if necessary. Use our checklist for the company outing to ensure you don't forget anything.
Consideration of VAT
The £110 threshold is understood to include VAT. This means that when calculating costs, you must consider VAT. For instance, if you visit a restaurant, you need to include the gross price (including VAT) in the calculation. Make sure that you record all prices inclusive of VAT to have a correct basis for calculation.
Inclusion of accompanying persons
If employees bring accompanying persons (e.g., partners or children) to the company outing, their costs must also be included in the calculation. The costs for the accompanying persons are attributed to the respective employee. The total costs are then divided by the number of all participants (employees and accompanying persons). This can lead to the £110 threshold being exceeded more quickly. The IHK Bonn provides an information sheet on this.
What does not count towards company outing costs
Not all costs associated with the company outing need to be included in the £110 threshold. There are certain exceptions you should know about to make optimal use of your budget.
Travel costs to the venue
Travel costs reimbursed within the usual travel expenses accounting are generally not part of the £110 threshold. This is particularly the case when the company outing does not take place at the regular place of work and the travel is organised by the employee themselves. In this case, travel costs can be billed separately without affecting the allowance. This can help reduce the overall costs of the company outing.
Flat-rate taxation avoids individual tax liability
Exceeding the allowance: What happens?
What happens if the costs per employee exceed the 110-euro limit? In this case, a so-called pecuniary advantage arises, which is tax-relevant. We explain how to deal with this and what options you have to minimise the tax burden for your employees.
The pecuniary advantage
If the costs per employee exceed 110 euros, a pecuniary advantage arises. This advantage is taxable and must be taxed accordingly. It is important to consider this aspect when planning the company outing to avoid unexpected costs. The Deutsche Handwerks Zeitung provides information on the key aspects.
Definition of the pecuniary advantage
The pecuniary advantage is the amount that exceeds the 110-euro limit. This amount is considered additional income and must be taxed accordingly. It is important to calculate the pecuniary advantage correctly and to take it into account in the payroll. Otherwise, there is a risk of back payments and penalties.
Taxation of the pecuniary advantage
The excess amount must be taxed as income and subject to social security contributions. This can represent an additional burden for the individual employee. However, there are ways to reduce or even avoid this burden. One option is flat-rate taxation by the employer.
The option of flat-rate taxation
To minimise the tax burden for your employees, you can, as an employer, tax the excess amount at a flat rate. This is a simple and convenient way to handle tax matters related to the company outing.
The 25% rule
The employer can tax the excess amount at a flat rate of 25% (plus solidarity surcharge and, if applicable, church tax). This relieves the employee from individual taxation. Flat-rate taxation is an attractive option as it offers benefits for both the employer and the employee. It simplifies payroll and provides clarity.
Advantages of flat-rate taxation
Flat-rate taxation offers several advantages: It simplifies payroll as the excess amount does not need to be taxed individually. In addition, the flat-rate taxed amount is exempt from social security contributions. This means that neither the employer nor the employee has to pay social security contributions on this amount. This can significantly reduce the overall cost of the company outing.
Make optimal use of two company outings per year
Frequency of Company Outings and Their Tax Treatment
How often can you organise a company outing and take advantage of tax benefits? Is there a limit? We clarify and show you how to optimally plan the frequency of your company outings.
Maximum of two events per year
The 110-euro allowance applies to a maximum of two events per calendar year. This means you can hold two company outings a year where you can use the allowance. It's important to keep this rule in mind to avoid a tax trap. Accountable provides detailed information on this.
The number of tax-advantaged company outings
The number of tax-advantaged company outings is limited to two per calendar year. If you conduct more than two events, the allowance is forfeited for the additional events. Therefore, it's advisable to carefully coordinate the planning of company outings and consider the tax aspects.
What happens with more than two events?
From the third event onwards, the allowance is void, and the costs are fully taxable. The employer can choose which two events are considered 'regular' company outings. This gives you the opportunity to select the events where the allowance is most sensible. It's important to document this decision carefully.
Exceptions and Special Cases
In addition to regular company outings, there are exceptions and special cases you should be aware of. These can help you optimise tax benefits while offering something special to your employees.
Anniversary Celebrations
Anniversary celebrations may fall under the regulation, whereas individual honours do not. If you are hosting an anniversary celebration for an employee or the company, the costs may potentially be claimed as a company outing. However, it's crucial to check the exact requirements and plan the event accordingly. Individual honours, on the other hand, are generally not tax-advantaged.
Combining with Training
If the company outing is combined with a training session or seminar, certain costs can be excluded from the 110-euro limit. This can be an attractive way to offer employees additional benefits while optimising tax advantages. Nevertheless, it's important to check the exact requirements and plan the event accordingly. Our outdoor team-building events can be excellently combined with training sessions.
Proper documentation ensures tax advantages
Documentation and Record-keeping Obligations
A meticulous documentation is essential to secure the tax benefits of a company outing. We will show you which documents you need and how to store them correctly.
Meticulous documentation is crucial
A comprehensive documentation is crucial to claim the tax advantages of the company outing. Without the appropriate proof, the costs cannot be deducted as business expenses. Therefore, it’s important to carefully collect and store all relevant documents. Team spirit emphasises the importance of documentation.
Required documents
You will need invoices with date, amount, purpose, and recipient, participant lists, and internal notes for calculating the cost per participant. These documents serve as proof of the incurred costs and compliance with tax regulations. It is advisable to arrange the documents chronologically and keep them in a separate folder.
Retention periods
The documents must be kept for at least ten years. This long retention period is legally required and ensures the traceability of business transactions. Therefore, it is important to store the documents securely and orderly to have them quickly available if needed.
Use of tax software
Using tax software can be advisable to simplify the management of receipts. These programs help you to record, archive, and evaluate the receipts.
Simplifying management
Tax software can assist in managing and archiving receipts. These programs often offer features for automatic recognition and assignment of receipts. This saves time and effort and minimises the risk of errors. Furthermore, you can use the software to create analyses and reports that give you an overview of the costs of the company outing.
Input Tax Deduction: 110 Euro Limit Determines
Aspects of VAT
VAT also plays a role in planning a company outing. We explain how you can make the best use of input tax deduction and what special considerations you need to keep in mind.
Input tax deduction within the 110-Euro limit
Up to an amount of 110 Euros per employee, the expenses are considered as "small gifts," and the input tax deduction is possible. This means you can reclaim the VAT included in invoices from the tax office. This can significantly reduce the costs of the company outing. However, it is important to carefully check the conditions for the input tax deduction.
“Small Gifts” and Input Tax
“Small gifts” are benefits provided by employers to their employees, which are not regarded as remuneration for work performed. Up to a value of 110 Euros per employee and event, these expenses can be written off as business expenses and input tax can be claimed. However, it is important that the expenses are reasonable and do not constitute an inappropriate enrichment.
No input tax deduction when exceeded
If the costs exceed 110 Euros, it is assumed that there is a predominantly private motivation, and the input tax deduction is not applicable. This means you cannot reclaim the VAT included in invoices from the tax office. Therefore, it is advisable to keep an eye on the costs per employee and not exceed the 110 Euro limit. Otherwise, the costs of the company outing can increase significantly.
Private motivation
If the costs per employee exceed 110 Euros, the tax office assumes that the event predominantly serves private purposes. In this case, the input tax deduction is not applicable as the expenses are no longer considered to be business-related. Therefore, it is important to keep costs within limits and not exceed the 110 Euro threshold.
Avoid typical errors in cost calculation
Practical Examples and Pitfalls
To help you plan your company outing, we've compiled some practical examples and typical pitfalls. This way, you can benefit from the experiences of others and avoid mistakes.
Examples of Typical Company Outings
Typical company outings include summer parties, Christmas celebrations, and team-building events. We will show you how tax regulations apply in various scenarios.
Summer Party, Christmas Celebration, Team-Building Event
A summer party provides an opportunity to improve the workplace atmosphere in a relaxed setting. A Christmas celebration is a traditional event to bring the year to a close together. A team-building event aims to enhance cooperation and camaraderie among staff. In all cases, it's important to consider tax regulations and keep an eye on costs. Our company outing ideas offer inspiration for unforgettable experiences.
Common Mistakes and How to Avoid Them
When planning a company outing, there are some common mistakes to avoid. We will show you what they are and how to improve.
Incorrect Calculation of Cost Per Participant
A common mistake is the incorrect calculation of cost per participant. This can result in exceeding the 110-euro limit without realizing it. To avoid this, you should carefully record all costs and perform the calculations accurately. Ensure that you consider all participants (employees and guests) and include VAT.
Incomplete documentation.
Failure to account for VAT.
Company outing: Plan early, document correctly
Conclusion and Recommendations for Action
The planning and organisation of a company outing requires careful preparation and consideration of various tax aspects. We summarise the key points and provide you with specific recommendations for action.
Summary of Key Points
The correct application of tax regulations is crucial to avoid additional payments and penalties. Pay attention to adhering to the 110-euro limit, the non-discriminatory invitation of all employees, and the careful documentation of all expenses.
The Importance of Correct Application of Tax Regulations
The correct application of tax regulations is not only important to avoid additional payments and penalties but also to strengthen the trust of your employees. By handling the tax aspects transparently and fairly, you show your employees that you take their interests seriously. This can positively influence employee motivation and the working atmosphere.
Recommendations for Employers
We provide you with specific recommendations for planning and organising company outings so that you can take full advantage of the tax benefits and offer your employees unforgettable experiences.
Planning and Organisation of Company Outings
Plan well in advance to keep costs under control. Ensure a careful documentation of all expenses and communicate clearly with employees about the tax aspects. This way, you can ensure that the company outing is a complete success and brings joy to all involved. At GoTuro, we are happy to support you with the planning and organisation of your individual company outing. Our experts are at your service with advice and assistance to help you make optimal use of the tax benefits.
Early planning to keep costs under control.
Careful documentation of all expenses.
Clear communication with employees about the tax aspects.
A successful company outing strengthens team cohesion and boosts your employees' motivation. Utilise the tax advantages to make the most of your budget and offer your employees unforgettable experiences. Contact us today to plan your bespoke company outing. We look forward to supporting you in implementing your ideas. Contact us now!
Tax-compliant company outings through comprehensive documentation
More useful links
The IHK Karlsruhe provides detailed information on the tax treatment of company events.
Haufe Finance Office Premium provides detailed information on allowances and deductible costs for company events.
IHK Bonn offers a leaflet on the tax treatment of company events.
Deutsche Handwerks Zeitung informs about important aspects that bosses and employees should consider during company outings.
Accountable provides detailed information on the tax deductibility of company outings.
Teamgeist emphasises the importance of documentation for the tax deduction of company outings.
FAQ
What exactly counts towards the costs of a company outing that fall under the 110-euro exemption?
The 110-euro exemption includes all costs directly associated with the company outing, including transport, catering, entrance fees, possible accommodation costs, and gifts up to 60 euros. It is important that VAT is included in this amount.
How does the participation of accompanying persons affect the calculation of the 110-euro limit?
If employees bring accompanying persons, their costs are attributed to the respective employee. The total costs are then divided by the number of all participants (employees and accompanying persons). This can lead to the 110-euro limit being exceeded more quickly.
What happens if the costs per employee exceed the 110-euro limit?
If the costs per employee exceed 110 euros, a so-called non-cash benefit arises. This benefit is taxable and must be taxed accordingly. The employer can tax the excess amount at a flat rate of 25 percent (plus solidarity surcharge and possibly church tax) to minimise the tax burden for the employee.
How often can a company use the 110-euro exemption per employee and year?
The 110-euro exemption is valid for a maximum of two events per calendar year. If you organise more than two events, the exemption does not apply to the additional events.
Are travel costs to the location of the company outing included in the 110-euro limit?
Travel costs, which are reimbursed as part of the usual travel expense accounting, are generally not part of the 110-euro limit. This is particularly true if the company outing does not take place at the regular work location and the journey is organised by the employee themself.
What must be considered in terms of documentation to secure tax advantages?
Comprehensive documentation is crucial. You need invoices with date, amount, purpose and recipient, participant lists, and internal notes to calculate the cost per participant. The documents must be kept for at least ten years.
How does VAT affect the 110-euro limit?
The 110-euro limit is understood to be including VAT. This means that you must take VAT into account when calculating the costs.
Can departments organise separate company outings and still use the exemption?
Yes, company outings can also be organised for individual departments as long as participation is open to all employees of the department. The 110-euro exemption can still be utilised.
