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company outing input tax deduction
Company Outing VAT Deduction: Yes or No? Avoid Costly Mistakes!
Planning a company outing and want to claim VAT? German tax law presents some pitfalls here. Whether a company outing qualifies for VAT deduction depends on various factors, particularly the 110-euro limit per employee and the primary purpose of the outing. Do you need assistance with the correct tax treatment of your company outing? Get in touch now!
The topic, briefly and concisely
The €110 limit per employee (including VAT) is crucial for the input tax deduction on company outings. Careful cost control is essential to avoid jeopardising the input tax deduction.
Note the two-event rule: Input tax deduction is typically only possible for a maximum of two company events per year. Plan carefully which events you claim for tax purposes.
Document all costs and participants carefully to demonstrate the business interest and secure the input tax deduction. A detailed participant list is mandatory.
Find out when you can claim input tax deduction for your company outing and which cost traps you should definitely avoid. Secure our expert knowledge now!
An office outing is a great way to strengthen the team and boost employee motivation. However, besides planning and organisation, the topic of VAT deduction also plays an important role. Many companies are uncertain about whether and to what extent they can claim VAT for a company outing. This article provides you with a comprehensive overview of the current regulations and shows you how to avoid costly mistakes.
We at GoTuro are your partner for unforgettable Adventure, Cultural, and Leisure Travel. We understand that a successful office outing should not only be fun but also tax-optimised. That is why we have created this guide to help you make the most of the VAT deduction for your next company outing. Our expertise in the field of incentive travel and workations enables us to offer you tailored solutions that will both inspire your employees and protect your budget. More information about our offers can be found on our Partyreisen page.
The VAT legislation is complex and presents some challenges. It is important to distinguish the business interests from the personal benefits of the employees. Adhering to the 110-euro limit plays a crucial role here. Below, you will find out which costs are included in this limit, what exceptions exist, and how to keep documentation correctly to claim the VAT deduction.
110-Euro limit: Secure input tax deduction through cost control
The 110-Euro limit per employee is a central aspect of input tax deduction for company events. This limit determines whether the costs are considered customary and thus whether the input tax deduction is possible. It is important to understand what is included in this calculation and what is not.
The 110 euros includes VAT. This means that the gross amount per employee must not be exceeded. The calculation includes all costs directly associated with the company outing, such as room rental, catering, and the supporting programme. However, wage costs and depreciation are not taken into account. ETL Auditing emphasises that it is a strict limit, not an allowance.
If the 110-euro limit is exceeded, the input tax deduction is lost for the entire amount. In addition, an income tax liability for the employee may arise if the benefit is considered a cash-equivalent benefit. To avoid this, careful planning and cost control are essential. One option is to choose alternative arrangements for the company outing that are more cost-effective while still promoting the team-building effect. Note that according to Haufe Finance Office Premium, the tax authorities deny the input tax deduction if the limit is exceeded, even though the BFH has proposed an adjustment for inflation.
Maximising Business Interest: How to Succeed with Input Tax Deduction
The decisive factor for input tax deduction on a company outing is whether the business interest or the private benefit of the employees predominates. If the outing primarily serves team building, employee motivation, or the promotion of employee loyalty, the business interest is generally considered to be present.
Team building activities that demonstrably improve teamwork and communication are a strong argument for corporate interest. Purely recreational events with no business relevance, on the other hand, are more likely to be seen as a private benefit. A high entertainment value alone is not sufficient to justify the input tax deduction. According to the Federal Fiscal Court (BFH), input tax deduction is not possible if the outing solely serves to improve the working atmosphere through joint leisure activities.
The jurisprudence of the BFH plays an important role in the assessment. Recent rulings show that the burden of proof lies with the company claiming the input tax deduction. Therefore, thorough documentation of the objectives and content of the company outing is essential. We at GoTuro are happy to assist you in designing company outings that both maximize the team building effect and meet tax requirements. Our incentive trips are specifically designed to enhance employee motivation while putting the business interest front and centre.
Make optimal use of input tax: Observe the two-events rule
As a business, you can generally benefit from the opportunity of input tax deduction, but you need to be aware of the so-called two-event rule. This rule states that input tax deduction is usually only possible for a maximum of two company events per year. What does this specifically mean for you?
From the third event onwards, the input tax deduction is generally no longer applicable. It is therefore advisable to carefully consider which events you select for the input tax deduction. In doing so, you should take into account the costs and business benefits of each event. The costs for an accompanying person are attributed to the participating person and can lead to the 110-euro threshold being exceeded. According to Lexware, if the threshold is exceeded, the employer can tax the excess amount at a flat rate of 25%, plus solidarity surcharge and church tax.
The handling of so-called no-shows, i.e., employees who have registered but do not attend the company outing, is also relevant to the input tax deduction. There is no input tax deduction for services not used. Therefore, it is important to document the actual number of participants, for example by having a participant list with signatures. This serves as proof in the event of a tax audit. We at GoTuro recommend keeping detailed documentation of all costs and participants to make optimal use of the input tax deduction and minimise potential risks.
Taking advantage of exceptions: Securing input tax deduction despite restrictions
Even though the 110-euro limit and the two-events rule restrict the VAT deduction, there are still special cases and exceptions you can take advantage of. One important exception is so-called tokens.
Tokens are low-value gifts up to a value of 60 euros (including VAT). These can be claimed for tax purposes regardless of the 110-euro limit and the two-events rule. The condition is that it truly is a token and not disguised remuneration. The tax advisor Schollmeier points out that tokens up to 60 euros for personal occasions are tax-free.
Irrespective of the 110-euro limit, as an entrepreneur, you can of course claim the VAT deduction for your own costs, provided you participate in the company outing. It is important that you document your participation accordingly. You should also ensure to avoid own consumption by claiming the VAT deduction correctly. An exchange of services between employer and employee should be avoided to prevent tax complications. We at GoTuro are happy to advise you on how to make optimum use of these exceptions to maximize the VAT deduction for your company outing.
Checklist: Implementing VAT deduction correctly for a company outing
To correctly implement the input tax deduction for the company outing, careful planning and documentation are essential. Here is a step-by-step guide and a checklist to help you:
Step-by-step Guide to Accurately Calculate the Cost per Employee
Record all relevant expenses: This includes room rental, catering, transport costs, costs for the supporting programme, etc.
Allocate the costs to participating employees: Consider accompanying persons as well.
Calculate the cost per employee: Ensure that the 110-euro limit including VAT is not exceeded.
Checklist for Documentation and Proof Obligations
Participant list with signatures: Document the actual number of participants.
Detailed invoices and receipts: Collect all relevant receipts and invoices.
Evidence of business interest: Document the objectives and content of the company outing.
At GoTuro, we recommend focusing on team building and business objectives when designing company outings. Avoid purely private amusements to enhance the business interest. Our workations offer an ideal opportunity to combine work and team building while also taking advantage of tax benefits.
Future in Focus: How to Secure Your Input Tax Deduction Long-Term
The tax regulations for company events are constantly changing. It is therefore important to stay informed about current developments and trends to secure the input tax deduction in the long term.
A planned increase in the exemption limit to 150 euros could influence the VAT guidelines. It is advisable to closely monitor developments and adjust the planning of company events accordingly. ETL Auditing points out that a planned increase in the income tax exemption limit to 150 euros could trigger a re-evaluation of the VAT threshold.
Digitalisation is also playing an increasingly important role in the documentation and accounting of company events. Automated recording of costs and participant numbers as well as cloud-based solutions facilitate management and minimise the risk of errors. At GoTuro, we rely on modern technologies to enable you to efficiently and transparently manage your company outings. Our expertise in adventure, cultural, and leisure travel combined with our knowledge in VAT makes us your ideal partner for unforgettable and tax-optimised company outings.
Input Tax Deduction: Master the Balancing Act with Expertise from GoTuro
The input VAT deduction for company outings is a delicate balance with clear rules. The 110-euro limit and entrepreneurial interest are crucial factors that you should definitely consider.
Careful planning and documentation are essential to avoid mistakes and financial disadvantages and to ensure compliance with the VAT laws. Stay informed and adjust your strategies according to the current legal situation. Take advantage of advisory services from tax advisors to be on the safe side.
We at GoTuro are your competent partner and support you in the planning and execution of your company outings. Our tailored solutions take into account both your individual requirements and the tax-related demands. Contact us today to plan your next company outing and make the most of the input VAT deduction. Contact us now and let our experts advise you!
More useful links
The Bundesministerium der Finanzen (BMF) provides information on current tax regulations and laws in Germany.
The Bundesfinanzhof (BFH) publishes judgments and decisions in the area of tax law, which are relevant for the assessment of input tax deductions.
The Deutsche Statistische Bundesamt (Destatis) supplies statistical data and information about the German economy.
The Institut der Wirtschaftsprüfer (IDW) offers professional information and standards for auditors and companies.
FAQ
What exactly does the 110 Euro limit mean for company outings?
The 110 Euro limit is a guideline per employee (including VAT). If the cost per employee exceeds this amount, input tax deduction is generally not possible. It is a strict limit, not a tax-free allowance.
What happens if the costs per employee exceed the 110 Euro limit?
If the 110 Euro limit is exceeded, the input tax deduction is no longer applicable for the entire amount. Additionally, a monetary benefit for the employee may arise, which is subject to income tax.
Which costs are included in the calculation of the 110 Euro limit?
All costs directly associated with the company outing are included in the calculation, such as venue hire, catering, transport costs, and the event programme. Wage costs and depreciation are not considered.
Are there exceptions to the 110 Euro limit?
Yes, so-called attentions (low-value benefits up to 60 Euros including VAT) can be claimed for tax purposes independently of the 110 Euro limit, provided they do not constitute hidden remuneration.
What is the two-event rule?
The two-event rule states that the input tax deduction is generally only possible for up to two company events per year. From the third event onwards, the input tax deduction is no longer applicable.
What must I consider regarding no-shows (non-participating employees)?
No input tax deduction is possible for unused services (no-shows). It is essential to document the actual number of participants, for instance, through a participant list with signatures.
How can I demonstrate the business interest in the company outing?
The business interest can be demonstrated through teambuilding activities that demonstrably improve teamwork and communication. Pure leisure events without a business connection are more likely to be seen as a private benefit.
Can I, as an entrepreneur, claim input tax deduction for my own costs?
Yes, as an entrepreneur, you can of course claim the input tax deduction for your own expenses, provided you participate in the company outing. It is important that you document your participation accordingly.
