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company outing with business partners
Company outing with business partners: Tax trap or win-win?
A company outing with business partners can strengthen relationships. But be careful: German tax law has some pitfalls. Are you planning an outing and want to ensure that everything runs smoothly? Find out now about the tax aspects and contact us for personalised advice to optimise your company outing: Hier geht es zum Kontaktformular.
The topic, briefly and concisely
Note the €110 allowance for employees to avoid income tax and social security contributions. The costs for business partners are treated as entertainment expenses and are subject to the 70% rule.
Carefully document the operational interest when inviting business partners to be able to claim the costs as business expenses. Incomplete documentation can lead to issues during the audit.
Combine the company outing with training or seminars to reduce the tax burden and increase financial flexibility within the 110-euro allowance. This can boost efficiency by up to 10%.
Learn how to organise an unforgettable company outing with your business partners without falling into the tax trap. Get informed now!
A company outing is more than just a pleasant day out of the office. It is an investment in employee motivation and team building. But what if you also invite your business partners? This can strengthen relationships but also involves tax pitfalls. In this article, you will learn how to organise an unforgettable company outing with business partners while optimally considering all tax aspects.
What are company outings and why are they important?
Company outings are events organised by the employer for the workforce. Their purpose is to increase employee motivation, promote team building, and strengthen company culture. They provide a welcome break from the daily work routine and allow employees to get to know each other better in a relaxed atmosphere. Besides the social aspect, tax considerations also play a role, as the tax authorities have precise rules here.
The role of business partners in company outings
Inviting business partners to a company outing can offer various benefits. They strengthen the business relationship, encourage informal exchange, and allow projects to be discussed in a relaxed environment. However, it is important to clearly distinguish these events from those intended solely for employees, as different tax rules apply to business partners. The costs for business partners are not counted towards the €110 tax-free allowance but are treated as hospitality expenses.
Make use of tax advantages: Optimally use the 110-Euro allowance
The taxation of company outings is an important topic for businesses. The state supports such events with an allowance of 110 euros per person and event. This allowance is crucial for payroll tax and social security and applies to a maximum of two events per year. It is important to understand what this allowance means and how to apply it correctly to take advantage of tax benefits and avoid pitfalls.
The 110-Euro Allowance: What It Means and How It Works
The 110-euro allowance is a tax concession that allows companies to provide benefits to their employees up to this amount per company event without incurring payroll tax or social security contributions. This amount applies per person and per event, with a maximum of two events per year being tax-favored. It is crucial to note that the allowance should not be confused with a tax exemption threshold. If the amount is exceeded, the entire amount is taxable.
Benefits and Their Tax Treatment
Benefits cover all costs incurred during a company outing, such as food, drinks, accommodation, travel expenses, and entertainment. It is important to distinguish between travel expenses and benefits. If employees organize their travel themselves, the costs can be treated as tax-free travel expenses. If the employer organizes the trip, they are considered benefits. The distinction between non-cash benefits and cash benefits is also relevant, especially when employees receive, for example, a meal allowance. According to Haufe.de, benefits include meals, drinks, accommodation, and travel expenses, among others.
The Role of the Tax Authorities: Strict Rules and Controls
The tax authorities place significant emphasis on compliance with tax rules for company outings. The tax office conducts regular audits and can levy additional taxes if the allowance is exceeded. Therefore, careful documentation of all costs and participants is essential. It is advisable to consult a tax advisor in case of doubt to ensure that all regulations are adhered to.
70% rule to observe: How to optimise taxes with business partners
When inviting business partners on a company outing, special tax rules apply. It is essential to distinguish between expenses incurred for business purposes and those for operational reasons. The costs for business partners are not counted towards the 110-euro tax allowance but are to be considered as entertainment expenses. This is where the 70% rule comes into play, which states that only 70% of reasonable entertainment expenses are deductible as business expenses.
Business vs. Operational Expenses
The distinction between costs for employees and business partners is crucial for correct tax treatment. While the costs for employees may fall under the 110-euro tax allowance, the costs for business partners are treated as entertainment expenses. This means they are not counted towards the allowance but are subject to the rules for entertainment expenses. It is important to clearly separate and adequately document these expenses.
The 70% Rule for Entertainment Expenses
The 70% rule states that companies can only deduct 70% of reasonable entertainment expenses as business expenses. This also applies to the costs incurred during a company outing for the entertainment of business partners. The remaining 30% are non-deductible. It is important to consider this rule when planning and budgeting the outing to optimise the tax burden. According to stb-schmetz.de, expenses for occupationally motivated entertaining of business partners can only be claimed as business expenses up to 70% of the reasonable entertainment costs.
VAT Treatment of Company Outings with Business Partners
The VAT treatment of company outings with business partners is another important aspect. The input tax deduction is only possible if the 110-euro allowance per employee is observed. Inviting business partners can affect the input tax deduction as their costs are included in the total costs. Correct invoicing and documentation are therefore essential to be able to claim the input tax deduction.
Steuerlast senken: Optimal use of separate events and training
To minimise the tax burden on company outings with business partners, there are various strategic approaches. One option is to separate events for employees and business partners. Another option is to combine the outing with training and seminars to reallocate costs to the field of further education. Both strategies can help to optimally utilise tax benefits and reduce the financial burden.
Separate events for employees and business partners
Separating events for employees and business partners can offer significant advantages in optimising the tax burden. By organising separate events for the two groups, you can ensure that the costs for employees remain within the 110-euro allowance and the costs for business partners are treated as business entertainment expenses. Alternatively, you can clearly separate the costs within one event to make optimal use of the tax advantages.
Combining with training and seminars
Another strategy to minimise the tax burden is to combine the company outing with training and seminars. If the outing is linked with further education, certain costs can be reallocated to further education, which can have a positive impact on tax treatment. However, it is important that the further education is recognised and has a clear relevance to the employees' professional activities. Examples of suitable training content are language courses, IT training, or team development measures. According to rechnungswesen-portal.de, companies can expand their financial leeway within the 110-euro allowance by combining with further education.
Lump-sum taxation of wage tax when the allowance is exceeded
If the 110-euro allowance is exceeded, there is the option of lump-sum taxation of the wage tax. This means that the employer pays a flat rate tax of 25% on the taxable part of the benefits. The advantage of lump-sum taxation is that no social security contributions are incurred. However, it is important to weigh up the advantages and disadvantages compared to individual taxation to find the optimal solution.
Document securely for audits: How to demonstrate business interest
Comprehensive documentation is crucial when dealing with the tax treatment of company outings with business partners. Only by recording all costs and participants in detail and being able to demonstrate the business interest, will you be on the safe side. Incomplete documentation can lead to problems during audits and, in the worst case, result in tax reassessments.
Participant lists and cost breakdown
A detailed participant list is essential. It should include all participants, including employees, business partners, and companions. Additionally, an accurate cost breakdown is required, showing all expenses separately by participant group. This documentation is critical for audits and serves as proof of correct tax treatment.
Proof of business interest
To claim the costs of inviting business partners as business expenses, you must demonstrate the business interest. This can be done, for example, by documenting contract negotiations, project meetings, or networking activities. The clearer the business purpose of the invitation, the better your chances of claiming the costs for tax purposes.
Invoices and receipts
Carefully keep all invoices and receipts. Ensure they are correctly issued with VAT shown, to claim the input tax deduction. The retention period for invoices and receipts is generally ten years. Proper documentation is important not only for the tax return but also in the event of an audit.
Avoid tax pitfalls: Keep the 110-euro limit and profit distribution in mind
When planning and organising company outings with business partners, there are some pitfalls that can lead to unexpected tax burdens. It is particularly important to keep an eye on the 110-euro allowance and minimise the risk of a hidden profit distribution. Careful planning and documentation are crucial to avoid these risks.
Exceeding the 110-euro allowance
Exceeding the 110-euro allowance has a direct impact on income tax and social security contributions. If exceeded, the entire amount becomes taxable, potentially resulting in tax demands. To prevent this, you should calculate the costs per person carefully and consider alternative strategies such as combining with training events if necessary. According to der-betrieb.de, if the 110 euro limit is exceeded, the entire amount, not just the excess, is subject to VAT.
Hidden profit distribution
A hidden profit distribution is a risk if the costs for the company outing are unreasonably high or if no business interest can be demonstrated. In this case, the tax office may classify the costs as non-deductible, which would increase the company's tax burden. To avoid this, keep costs within a reasonable range and document the business interest diligently.
Lack of or inadequate documentation
A lack of or inadequate documentation can result in the tax office not recognising the costs for the company outing as business expenses. This can lead to corrections by the tax office and thus to a higher tax burden. Therefore, meticulous documentation of all costs, participants and the business interest is essential.
Case Law in Focus: Stay Up-to-Date
The tax treatment of company outings and company events is subject to constant changes due to new rulings and legislative amendments. It is therefore important to stay regularly informed about the current legal situation and adjust your approach accordingly. The latest rulings from the Federal Fiscal Court (BFH) and the guidelines from the Federal Ministry of Finance (BMF) are particularly relevant.
Latest Rulings of the Federal Fiscal Court (BFH)
The rulings of the BFH have a significant impact on the tax treatment of company outings. They provide insights into the interpretation of the current legal situation and may necessitate adjustments in your approach. It is advisable to regularly follow the latest rulings of the BFH and assess their consequences for your company's practices.
Changes in the Value Added Tax Act (UStG)
Changes in the UStG can also affect the input tax deduction for company outings. It is important to adjust invoicing and documentation accordingly to continue claiming the input tax deduction. Stay informed about changes in the UStG and adjust your company practices accordingly.
Guidelines from the Federal Ministry of Finance (BMF)
The BMF regularly publishes administrative instructions and guidelines on the tax treatment of company outings. These guidelines provide insights into the interpretation of the current legal situation and can serve as a guide for your own approach. It is advisable to regularly consult the guidelines of the BMF and adjust your company practices accordingly.
Use the checklist: How to plan the perfect company outing with partners
Planning a company outing with business partners requires careful preparation and consideration of numerous aspects. To ensure you don’t overlook anything, we have compiled a comprehensive checklist for you. This will help you plan the outing optimally and take all tax aspects into account.
Planning Steps
Planning begins with setting the budget and selecting the venue and activities. Subsequently, the invitations to participants (employees and business partners) are sent out, and a detailed programme is drawn up. Ensure that the programme includes both entertaining and business elements to maintain business interest.
Tax Aspects
Check whether compliance with the 110 Euro tax allowance is ensured and consider the 70% rule for hospitality expenses. Ensure that the VAT deduction is secured and that all tax aspects are correctly taken into account. In case of doubt, you should seek advice from a tax advisor.
Documentation
Create a detailed list of participants and an account of all costs, broken down by participant groups. Document the business interest and keep all invoices and receipts carefully. Thorough documentation is essential for a successful tax audit.
Key Benefits of Betriebsausflüge
Here are some of the key benefits you'll gain:
Benefit 1: Increase in employee motivation: A well-planned company outing can significantly boost your employees' motivation and satisfaction.
Benefit 2: Strengthening business relationships: Inviting business partners provides an excellent opportunity to strengthen relationships and promote informal exchange.
Benefit 3: Optimisation of tax burden: By observing tax rules and allowances, you can minimise your tax burden while creating an unforgettable event.
Secure tax advantages: Take advantage of professional advice!
More useful links
Bundesministerium für Arbeit und Soziales (BMAS) – Here you will find information on the legal framework and funding programmes in the area of employee motivation and labour law.
Haufe.de – Provides detailed information on the 110-euro allowance for company events and the correct tax treatment of benefits.
rechnungswesen-portal.de – Explains how combining company outings with training sessions can bring tax advantages and expand financial leeway.
der-betrieb.de – Informs about the tax implications if the 110-euro allowance is exceeded and the resulting VAT obligation.
FAQ
What does a tax-optimised company outing cost per person?
A tax-optimised company outing should not exceed the €110 limit per employee to avoid income tax and social security contributions. Different rules apply to business partners (catering costs).
How does inviting business partners affect VAT deductions?
The VAT deduction is only possible if the €110 allowance per employee is adhered to. The costs for business partners are included in the total costs and can affect the VAT deduction.
What costs are included in the €110 allowance?
All costs incurred during the company outing, such as food, drink, accommodation, travel expenses, and entertainment, are included in the €110 allowance.
How do I document business interest when inviting business partners?
The business interest can be demonstrated through the documentation of contract negotiations, project meetings, or networking activities.
What is the 70% rule and how does it affect company outings with business partners?
The 70% rule states that only 70% of reasonable catering costs for business partners are tax-deductible as business expenses.
Can I combine a company outing with a training session to save taxes?
Yes, combining a company outing with a training session can shift certain costs towards training, which can positively affect tax treatment.
What happens if the €110 allowance is exceeded?
If the €110 allowance is exceeded, the entire amount becomes taxable, which can lead to tax demands.
What role does case law play in the tax treatment of company outings?
The case law of the Federal Fiscal Court (BFH) has a significant impact on the tax treatment of company outings. It is advisable to regularly follow the latest case law.
