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Corporate outing with overnight stay tax-deductible
Claiming a company outing with overnight stay as a tax deduction: Save intelligently!
A company outing with an overnight stay strengthens team spirit and can even be tax-deductible. Sounds good? It is! But beware: There are some things to keep in mind to get the tax office on board. In this article, you'll learn how to optimally plan your company outing and which costs can be claimed for tax purposes. Need individual advice? Get in contact here with us.
The topic, briefly and concisely
Optimally utilise the €110 allowance by taking all relevant expenses into account and calculating them correctly. Careful planning and comprehensive documentation are crucial for tax deductibility.
Maximise the tax benefits by combining the company outing with a job-related training session and clearly defining the participation conditions. This can increase employee retention by up to 5%.
Avoid tax pitfalls by correctly allocating the costs for accompanying persons, keeping an eye on the frequency of excursions, and ensuring equal treatment of all employees.
Plan an unforgettable company outing with an overnight stay and save taxes! Learn all about allowances, deductible costs, and clever structuring options.
Planning an unforgettable company outing with overnight stay and want to cleverly save on taxes? At GoTuro, your expert for unforgettable travel experiences, we'll show you how to make the most of the tax advantages. A company outing is more than just a nice gesture for your employees – it's an investment in employee motivation and team building. With the right planning and documentation, you can even deduct the costs of your company trip from taxes.
This article will provide you with everything you need to know about the allowance, deductible expenses, and customization options to make your company outing with overnight stay tax-deductible. We'll give you valuable tips and advice so that your next company outing is not only unforgettable but also cost-efficient. We'll discuss the differences between a classic company outing and pure reward trips (incentive trips) and show you how an overnight stay affects tax treatment.
What is a company outing and why is the overnight stay relevant?
A company outing is an event organized by the employer for its employees to improve the working atmosphere and promote collaboration. In a tax context, it's important to distinguish the company outing from pure reward trips (incentive trips). While the company outing is open to all employees, the incentive trip is often directed at selected employees as a reward for special achievements. The overnight stay plays an important role as it influences the cost structure of the outing and, therefore, the deductibility.
The overnight stay can significantly increase the overall costs of the company outing, which in turn affects the tax deductibility. Therefore, it is important to plan and document the costs carefully in order to make the most of the allowance. Unlike day trips, which often have lower costs, a company outing with overnight stay requires more detailed planning and calculation.
Overview of the tax framework conditions
Since 2015, there is an allowance of 110 euros per employee and event. This allowance replaces the former exemption limit, where even a slight exceedance of the limit made the entire amount taxable. The difference between allowance and exemption limit is crucial for the tax treatment of the company outing. With the 110-euro allowance per employee, you benefit from more flexible regulations, as only the amount exceeding this is considered a taxable benefit. The key laws and regulations to consider for the tax treatment of company outings are the Income Tax Act (EStG) and the Value Added Tax Act (UStG). Relevant rulings by the Federal Finance Court (BFH) and the Federal Labour Court (BAG) provide additional insights into the interpretation of laws and their application in practice.
Make the most of the 110-Euro allowance: Here's how to calculate correctly
The 110 Euro allowance is an important factor when planning your company outing with an overnight stay. But which costs are actually included in the allowance and how is it correctly calculated? At GoTuro, we provide you with a detailed overview so that you can make optimal use of the allowance and avoid any unpleasant surprises. It is important to consider all relevant costs to ensure the tax deductibility of your company outing.
What costs are included in the allowance?
The allowance includes a variety of costs associated with the company outing. These include transport costs (bus, public transport), entrance fees (museums, theatres, amusement parks), catering (food, drinks), accommodation costs, costs for event management and entertainers, and gifts (up to 60 Euros). It is important to record all these costs and factor them into the calculation of the allowance. Non-deductible costs include internal costs (e.g. wage costs for internal organisation), transport costs from branch offices to the central meeting point (team spirit), and cash benefits where the use is not guaranteed.
However, there are also costs that are not included in the allowance. These include, for example, internal costs such as wage costs for the internal organisation of the company outing. Similarly, transport costs from branch offices to the central meeting point are non-deductible. Caution is advised with cash benefits: these are only deductible if the use is guaranteed.
Calculation of the allowance per employee
To correctly calculate the allowance per employee, you must first determine the total costs of the company outing. Record all costs, including VAT. Divide the total costs by the number of actually present participants (including accompanying persons). The costs for accompanying persons are allocated to the respective employee. It is important to note that only the actually present participants are considered in the calculation. Missing participants increase the cost per head and can lead to the allowance being exceeded.
The calculation of the allowance per employee is carried out in several steps. First, you need to determine the total costs, including VAT. Next, divide the total costs by the number of actually present participants, including accompanying persons. The costs for accompanying persons are assigned to the respective employee. This way, you get the amount relevant to the tax treatment per employee.
Examples for illustration
Case Study 1: Costs below 110 Euros: The total costs for the company outing amount to 5,000 Euros. 50 employees participate. The cost per employee is 100 Euros. As this amount is below the allowance of 110 Euros, the company outing is tax deductible.
Case Study 2: Costs over 110 Euros – Options for the Employer: The total costs for the company outing amount to 6,000 Euros. 50 employees participate. The cost per employee is 120 Euros. As this amount exceeds the allowance of 110 Euros, there are two options: either the employee pays tax on the benefit in kind themselves or the employer takes on the flat-rate wage tax of 25 percent on the difference (10 Euros per employee).
Maximise tax benefits: How to optimally organise your company outing
The organisation of your company outing plays a crucial role when it comes to making the most of the tax advantages. At GoTuro, we show you how, through smart combinations and by considering important conditions, you can make your company outing not only unforgettable but also tax efficient. There are various ways to optimise costs and make the best use of the tax-free allowance.
The combination with further training
A clever way to maximise the tax advantages is to combine the company outing with a training session. By partially allocating costs to the training component, you increase the financial margin within the tax-free allowance. Suitable training measures include, for example, language courses, IT training, or team-building activities. It is important that the training has a clear relation to the professional context and is documented accordingly. To assign the costs correctly, you should issue separate invoices for the outing and training. The temporal allocation of costs can, for example, follow the BFH ruling Az. Gr S 1/06.
The combination with further training offers several advantages. On the one hand, you can shift part of the costs onto the training component, which reduces the amount budgeted for the company outing. On the other hand, you can provide your employees with additional value by giving them the opportunity to expand their skills and knowledge. However, ensure that the training has a clear relation to the professional context and is documented accordingly.
Participation terms and equal treatment
To utilise the tax advantages, the company outing must generally be open to all employees (or a department). There must be no preference for certain groups of employees. Participation must be voluntary. Employees who do not wish to take part must be offered an alternative activity. Equal treatment of all employees is an important aspect to ensure the tax deductibility of the company outing. If certain groups of employees are favoured, this may result in the entire outing becoming taxable.
It is important that all employees have the opportunity to participate in the company outing, regardless of their position, salary, or length of service. Participation, however, must be voluntary. Employees who do not wish to participate must not be disadvantaged and should be offered an alternative activity.
Frequency of company outings
A maximum of two tax-advantaged outings can be claimed per year. The employer chooses which two outings are claimed for tax purposes. Additional outings are fully taxable. It is therefore important to keep an eye on the frequency of company outings and to optimise the tax advantages. If more than two outings are held per year, you should carefully consider which outings you want to claim for tax purposes.
The limit of two tax-advantaged outings per year serves to prevent abuse and to ensure that the tax advantages are actually used to promote the working environment and employee motivation. The employer has the option to claim the outings with the highest costs for tax purposes to maximise the tax relief.
Companions and Special Expenses: How to Avoid Tax Traps
When planning a company outing with overnight stay, there are a few special cases that require particular attention. At GoTuro, we show you how to manage the tax treatment of accompanying persons and special types of costs correctly to avoid tax pitfalls. It is important to consider all relevant aspects to ensure the tax deductibility of your company outing.
Accompanying Persons (Partners, Children)
The costs for accompanying persons (partners, children) are attributed to the respective employee and thereby increase the taxable amount for that employee. It is important to take this into account when calculating the allowance. A separate examination is required if it involves business relationships. Here, a distinction must be made between participants motivated by business and those motivated by professional reasons (e.g., business partners). (WWS Group)
The allocation of costs for accompanying persons to the employee can lead to the allowance being exceeded more quickly. It is therefore advisable to record the costs for accompanying persons separately and consider them when planning the company outing. In business relationships, a clear distinction between participants motivated by business and those motivated by professional reasons is necessary to handle the tax treatment correctly.
Special Types of Costs
Transport costs from branches to the central meeting point are not deductible. When hiring artists, the artists' social security contribution must be taken into account. VAT aspects also play a role: input tax deduction is only possible if the outing does not primarily serve private benefits. Please note the BFH ruling of 10 May 2023 - V R 16/21. There are certain types of costs that require special attention in the tax treatment of company outings. These include, for example, travel costs between branches that are not deductible. The artists' social security contribution when hiring artists must also be considered. VAT aspects also play a role: input tax deduction is only possible if the outing does not primarily serve private benefits.
The non-deductibility of transport costs between branches is important information for companies with multiple locations. The artists' social security contribution should also be considered when planning the company outing to avoid unexpected costs. VAT aspects are also significant, as input tax deduction is only possible under certain conditions.
Involve the works council: How to make your company outing legally secure
The involvement of the works council and consideration of labour law aspects are crucial for a legally secure company outing. At GoTuro, we show you the role of the works council and the labour law aspects you should consider to make your company outing legally secure. It is important to consider all relevant aspects to avoid conflicts and ensure the tax deductibility of your company outing.
Co-determination rights of the works council
In principle, the works council has no co-determination rights regarding the company outing. An exception exists if the outing is set up as a reward or bonus. Individual agreements with employees exclude the right of co-determination. It is important to know and respect the co-determination rights of the works council to avoid conflicts. If the company outing is set up as a reward or bonus, the works council has a right of co-determination. However, individual agreements with employees exclude this right.
The lack of co-determination for a traditional company outing gives the employer freedom of design. However, if the outing is set up as a reward or bonus, the works council must be involved. Individual agreements with employees can circumvent the works council's right of co-determination.
Company practice
Through regular occurrence (about three outings), a company practice can develop, which establishes a legal claim for employees. To avoid unintended obligations, legal advice should be sought. The company practice can lead to employees acquiring a legal claim to future company outings. To avoid unintended obligations, it is advisable to seek legal advice.
The development of company practice can bring unexpected obligations for the employer. Therefore, it is important to keep an eye on the frequency of company outings and seek legal advice if necessary to avoid unintended obligations.
Working hours and accident insurance
A company outing during working hours is generally considered working time. However, there is no entitlement to overtime pay, even if it involves an overnight stay or extension of working hours. Statutory accident insurance covers standard company outings but not accompanying persons or incentive outings. It is important to consider working time and insurance aspects to ensure employee safety and avoid legal consequences. A company outing during working hours is generally regarded as working time, but there is no entitlement to overtime pay. Statutory accident insurance covers standard company outings, but not accompanying persons or incentive outings.
Treating the company outing as working time affects employees' working time accounts. It is important to take this into account when planning the outing. Accident insurance coverage should also be clarified in advance to ensure employee safety.
Document in compliance with tax office requirements: How to ensure tax deductibility
A comprehensive documentation is crucial to demonstrate the tax deductibility of your company outing to the tax office. At GoTuro, we show you which documents you need and how to store them correctly to be well-prepared in case of an audit. Diligent documentation is essential to ensure the tax deductibility of your company outing.
Necessary Documents
The necessary documents include a signed attendance list as proof of attendance, detailed invoices and receipts with date, amount, purpose, and recipient, as well as a clear cost breakdown of all expenses and their allocation to participants. It is important to collect and keep all these documents carefully, to provide evidence in case of an audit by the tax office. The attendance list serves as proof of who actually participated in the company outing. The invoices and receipts document the incurred costs. The cost breakdown shows how the expenses were distributed among the participants.
The attendance list should be signed by all participants to confirm their presence. The invoices and receipts should be detailed and contain all relevant information. The cost breakdown should be clear and show all types of expenses as well as their allocation to participants.
Retention Periods
All relevant documents must be kept for at least ten years. It is advisable to archive the documents digitally to protect them from loss or damage. The long retention period allows the tax office the opportunity to review the tax treatment of the company outing even years later. Therefore, it is important to keep all relevant documents carefully.
Digital archiving offers the advantage of storing documents in a space-saving and secure manner. It also allows quick access to the documents in case of an audit by the tax office.
Recommendations for Digital Archiving
Using tax software significantly eases the management and archiving of documents. There are various tax software solutions tailored specifically to the needs of businesses and support the tax treatment of company outings. The use of tax software can greatly simplify the management and archiving of documents. There are various tax software solutions specifically tailored to the needs of businesses that support the tax treatment of company outings.
Tax software offers the advantage of automatically capturing, categorising, and archiving documents. It can also assist in calculating the tax allowance and compiling the cost breakdown. This saves time and reduces the risk of errors.
Avoiding Tax Pitfalls: How to Circumvent Common Mistakes
Even with careful planning, errors can occur in the tax treatment of corporate events. At GoTuro, we show you the most common pitfalls and how to avoid them to preserve your tax advantages. Knowing the most common mistakes is essential to prevent them and ensure the tax deductibility of your corporate event.
Incorrect calculation of the allowance
A common mistake is failing to consider all costs, such as event management or the artist social security contribution. Misallocation of costs to participants or incorrect calculation of per capita costs can also lead to problems. It's important to consider all types of costs and distribute the costs correctly among participants to accurately calculate the allowance. Ignoring all costs may lead to exceeding the allowance, rendering the corporate event taxable. Also, incorrect allocation of costs to participants can cause issues, especially when accompanying persons are involved.
To avoid an incorrect calculation of the allowance, make sure to record all types of costs carefully and distribute the expenses accurately among the participants. Be sure to include costs such as event management or the artist social security contribution.
Inadequate documentation
Missing participant lists or incomplete invoices significantly complicate verification with the tax authorities. It is crucial to keep all relevant documents complete and accurate to be able to provide evidence in the event of an audit. Inadequate documentation is one of the most common reasons why the tax authorities reject the tax deductibility of the corporate event. Therefore, it's important to store all relevant documents completely and correctly.
To avoid inadequate documentation, you should create a checklist of required documents and ensure that all documents are stored completely and accurately.
Violation of equal treatment principles
Favoring individual employee groups results in the full tax liability of the event. It's important to ensure that all employees have the opportunity to participate in the corporate event to maintain tax deductibility. A violation of the equal treatment principles is a serious mistake that can lead to the event's full tax liability. Therefore, it's important to ensure that all employees are given the opportunity to participate in the corporate event.
To avoid a violation of the equal treatment principles, you should offer the corporate event to all employees (or a department) and ensure that participation is voluntary.
Tax-optimised planning: Your checklist for the company outing with overnight stay
With our checklist, you are well-equipped to optimise your company outing with overnight stay for tax purposes. We at GoTuro have summarised all the important points for you so that you don't forget anything in your planning and can fully exploit the tax benefits. Careful planning is the key to success in ensuring the tax deductibility of your company outing.
Before Planning
Seek tax advice to address any tax questions with a tax adviser. Address employment law questions with a lawyer. Check your insurance cover (accident insurance, liability insurance). Before planning, you should seek comprehensive advice to clarify all tax and legal questions. Insurance cover should also be checked to ensure you are protected in case of an accident or damage.
Tax advice helps you to make the most of the tax benefits and avoid mistakes. Legal advice ensures that you observe all employment law aspects and avoid conflicts. The insurance check protects you from financial risks in the event of an accident or damage.
During Planning
Plan the budget considering the allowance per employee. Set participation conditions and ensure the outing is open to all employees and participation is voluntary. Prepare the documentation and create a template for the participant list. During planning, you should carefully calculate the budget and set the participation conditions. Documentation should also be prepared to capture all relevant information.
Budget planning helps you to keep costs within the allowance. Setting participation conditions ensures that all employees have the opportunity to participate in the company outing. Preparing the documentation facilitates the later capture and archiving of information.
After the Outing
Record and allocate all costs in detail. Complete the documentation and have the participant list signed. Check the tax treatment and ensure the allowance has been applied correctly. After the outing, you should record and allocate all costs, complete the documentation, and review the tax treatment. This ensures that you have captured all relevant information and correctly utilised the tax benefits.
Detailed recording and allocation of costs enable a correct calculation of the allowance. Completing the documentation ensures that you have all the relevant information ready for the tax office. Reviewing the tax treatment ensures that you correctly utilise the tax benefits and avoid mistakes.
Seek tax advice: Address any tax questions with a tax adviser.
Seek legal advice: Address employment law questions with a lawyer.
Insurance check: Verify your insurance cover (accident insurance, liability insurance).
Boosting Employee Motivation: How to Make the Most of Your Company Outing
More useful links
Bundesfinanzministerium provides official information on the tax treatment of company parties.
Arbeitgeber.de offers information on personnel management and employment law topics.
Deutscher Steuerberaterverband (DStV) provides expert information on tax matters in the economy.
Institut der Wirtschaftsprüfer (IDW) provides expertise on economic and tax topics.
FAQ
What exactly is covered by the €110 allowance per employee?
The €110 allowance includes all costs directly associated with the company outing, such as transport, accommodation, meals, admission fees, and event management. Internal costs, such as wages for organising the event, are not included.
What happens if the costs per employee exceed the €110 allowance?
If the costs exceed the allowance, only the excess amount is taxable. The employer can choose to pay the tax at a flat rate of 25% or allow the employee to individually declare the monetary benefit.
Can departments also organise separate company outings and benefit from tax advantages?
Yes, separate outings for departments are possible as long as all employees in the respective department have the opportunity to participate. Equal treatment is crucial for claiming tax benefits.
How often in a year can a company organise a tax-favoured outing?
A maximum of two tax-favoured company outings per calendar year can be conducted. The employer can decide which two outings are eligible for tax benefits.
Are the costs for accompanying persons (partners, children) also added to the employee's allowance?
Yes, the costs for accompanying persons are attributed to the respective employee and thus increase the taxable amount for the employee.
What should be considered in the documentation of a company outing to ensure tax deductibility?
A complete documentation is essential. This includes a signed list of participants, detailed invoices and receipts, and a clear breakdown of costs.
What role does the works council play in planning a company outing?
In general, the works council has no co-determination rights in a traditional company outing. An exception exists if the outing is designed as a reward or bonus.
How can a company outing be combined with training to save taxes?
By combining it with training, costs can be shifted to the training portion, reducing the amount attributed to the company outing. However, the training must have a clear professional context.
