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Company outing how often per year
Company outing: How often per year is optimal for tax purposes?
Planning the next company outing? The number of outings has tax implications. This article explains how often you can organise a company outing each year to maximise all tax benefits. Need support with planning and tax optimisation of your company outings? Contact us now for personalised advice!
The topic, briefly and concisely
Companies may claim a maximum of two company events per year for tax purposes. Compliance with this regulation is crucial to benefit from tax advantages.
The 110-euro limit includes various cost factors, and exceeding it requires choosing between individual and flat-rate taxation. A careful cost calculation is essential.
Participation in company outings is voluntary, and there are specific regulations regarding its consideration as work time and accident insurance coverage. Strategic planning can improve employee retention by up to 10%.
Learn how many company outings per year are tax-deductible and what costs you need to consider to avoid any unpleasant surprises.
Introduction to Company Outings and Their Tax Treatment
What are company outings and why are they important?
Company outings are events organized by businesses for their employees to promote team spirit and boost employee motivation. They aim to strengthen corporate culture and create a positive working atmosphere. These outings can take various forms, from day trips to cultural sites to multi-day trips with adventure activities. At GoTuro, we understand how crucial it is for these experiences to be not only enjoyable but to also have a lasting positive impact on the team. Our party trips and especially our incentive trips are designed to achieve exactly these goals.
Overview of the tax framework
The tax framework plays a crucial role in planning company outings. Particularly important is the 110-euro threshold, which determines the amount up to which the costs per employee remain tax-free. In addition, flat-rate taxation is an essential aspect that regulates the tax treatment of higher costs or additional events. It is important to understand these regulations in order to avoid undesirable tax consequences. Correct application of these rules allows for optimal budget use while offering an attractive package to employees. Lexware provides detailed information on this.
Tax benefits: Make the most of two company outings per year
The frequency of company outings per year: What is common and what is allowed?
The tax limit: A maximum of two events per year
In Germany, companies can claim a maximum of two company events per year for tax purposes. This regulation is specified in the Income Tax Act (§ 37b EStG) and aims to keep the costs for such events in check. These events include not only traditional company outings but also Christmas parties, summer festivals, or anniversary celebrations. It is important to note that this limit applies per employee. This means that an employee attending more than two events may have to accept individual taxation of their benefits. Further information can be found at Haufe.
Legal regulations and their interpretation
The legal provisions concerning company events are anchored in § 37b EStG. This paragraph regulates the tax treatment of employer's gifts to employees. A distinction is made between a tax exemption limit and a threshold amount. The tax exemption limit relates to income tax, while the threshold amount concerns sales tax. It is crucial to understand this distinction as exceeding the threshold means that input tax can no longer be deducted. Trialog Magazin explains the tax aspects in detail.
Exceptions and special cases
There are certain exceptions and special cases that need to be considered when planning company outings. For example, function-related participation in more than two events (e.g., for HR staff or works council members) may be treated differently for tax purposes. The effects of employee departures or transfers can also play a role. If an employee, for instance, leaves during the year and has already participated in two events, this may affect the tax treatment of the remaining events. Careful documentation and individual assessment are required in these cases.
110-Euro limit: Precisely calculate and optimise cost factors
The 110-euro limit in detail: What counts towards it and how is it calculated?
Components of the calculation: Including and excluding costs
Calculating the 110-euro limit is a central aspect of planning company outings. It is important to know which costs are included in the calculation and which are not. Costs that need to be considered include meals, drinks, venue hire, music, and event manager. The VAT is also an important factor to be taken into account. Travel expenses can also be included in the calculation under certain conditions. On the other hand, there are costs that are not considered, such as flat-rate taxed gifts (§ 37b EStG) and the employer's own costs (e.g., payroll accounting). Rödl & Partner offers detailed information on this topic.
Costs included in the calculation
Various cost factors must be considered when calculating the 110-euro limit. These include:
Meals and drinks: The cost of catering during the company outing.
Venue hire: If an external venue is rented.
Music and entertainment: Costs for DJs, bands, or other entertainers.
Event manager: Fees for organizing and conducting the outing.
VAT: The value-added tax that applies to most of these costs.
It is important to document all these costs to have a correct basis for calculation. Travel expenses can also be relevant, especially if the event does not take place at the company's main location and employees have to organize their travel themselves. GoKonfetti's information may be helpful here.
Costs not included in the calculation
Some costs are not considered in the calculation of the 110-euro limit. These include:
Flat-rate taxed gifts (§ 37b EStG): Gifts that have already been taxed at a flat rate.
Employer's own costs: Internal costs such as payroll accounting or personnel costs for organization.
Tax-free travel expense reimbursements (§ 3 No. 13 or 16 EStG): Reimbursements that have already been treated as tax-free.
These costs can be considered for budget planning, but do not affect the tax assessment of the company outing. It is advisable to consult a tax advisor in case of doubt to correctly consider all aspects.
Practical examples for calculating the 110-euro limit
To illustrate the calculation of the 110-euro limit, we consider two scenarios:
Scenario 1: Costs below the limit
A company organizes a day trip to a theme park. The cost per employee is 80 euros, including entry, catering, and transport. Since the costs are below the 110-euro limit, they are tax-free.
Scenario 2: Costs above the limit – options for taxation
A company hosts a Christmas party in an upscale restaurant. The cost per employee is 150 euros. In this case, the excess amount of 40 euros must either be taxed individually or at a flat rate of 25%. The choice of method depends on various factors, such as the number of participants and the individual tax rates of the employees.
Avoid tax pitfalls: Make optimal use of flat-rate taxation
Tax treatment when exceeding the 110-euro limit
Options for taxing the excess amount
If the costs per employee exceed the 110-euro limit, there are two options for taxing the excess amount: individual taxation and flat-rate taxation (25%). With individual taxation, the excess amount is added to the employee’s personal income and taxed accordingly. Flat-rate taxation, however, allows the employer to tax the excess amount at a flat rate of 25%. Both methods have advantages and disadvantages, which will be explained below.
Individual taxation vs. flat-rate taxation (25%)
Individual taxation has the advantage that it can be cheaper for employees with a low personal tax rate. However, it also means a higher administrative effort for the employer, as the individual tax rates of employees must be considered. Flat-rate taxation, on the other hand, is easier to handle, as it provides for a fixed tax rate of 25%. However, it can be more expensive for employees with a low personal tax rate. The decision between the two methods depends on the composition of the workforce and the employer’s individual preferences. The Handwerksblatt provides further information on this.
Impact on social security contributions
The choice between individual and flat-rate taxation also affects social security contributions. With individual taxation, social security contributions are normally deducted from the excess amount. In the case of flat-rate taxation, social security contributions on the excess amount are waived. This can be a decisive advantage of flat-rate taxation, especially if social security contributions are high. However, it is important to note that a late flat-rate taxation can lead to social security obligations.
Employer's choice: Which event is taxed?
The employer has the right to choose which event is taxed when costs exceed the 110-euro limit. This allows for a strategic selection of the event to be taxed, for example, the one with the lowest costs. This can help minimise the tax implications. It is advisable to conduct a cost analysis in advance to make the optimal choice.
Important deadlines and documentation obligations
Important deadlines and documentation obligations must be observed in the tax treatment of company outings. The creation of the income tax certificate and the possibilities for correction are of central importance here. The importance of a participant list for documentation should also not be underestimated. Careful documentation of all costs and participants is essential in order to be able to present all relevant information in the event of an audit by the tax office. Haufe provides detailed information on this.
Secure participation: Ensure voluntariness and insurance coverage
Organisational Aspects of Company Outings: Participation, Working Hours, and Insurance Coverage
Voluntary Participation and Right to Privacy
Participation in a company outing is generally voluntary and based on the right to privacy of employees. There is no obligation to participate, especially outside regular working hours. This means that employees who do not wish to attend cannot be forced to do so. It is important to consider this when planning and organising company outings and to offer alternative options to employees.
Alternatives for Employees Who Do Not Wish to Participate
For employees who do not wish to participate in a company outing, alternative options should be offered. For example, they can continue with their regular duties during normal working hours. It is crucial that these employees are not disadvantaged and receive the same appreciation as those attending the outing. Open communication and flexible solutions are key to success here. Younited offers more information on this.
Working Hours and Compensation During the Company Outing
Working hours and compensation during a company outing are important aspects that need to be considered during planning. Generally, the time spent during the company outing is credited towards regular working hours, but only up to the usual daily working time. Overtime regulations and part-time employment also need to be considered. It's important to establish clear regulations to avoid misunderstandings and dissatisfaction.
Credit Towards Regular Working Hours
The time employees spend during a company outing is usually credited towards their regular working hours. However, this only applies up to the usual daily working time. If the company outing lasts longer, overtime may occur. It is crucial to communicate this in advance and make appropriate arrangements. Our article on working hours during company outings provides further details.
Overtime Regulations and Part-time Employment
When planning company outings, overtime regulations and the specifics of part-time employment must also be considered. Part-time employees are only compensated for their regular working hours. If the outing lasts longer, participation is voluntary. Overtime generally does not occur since participation is voluntary. It is advisable to discuss these aspects with employees in advance and find individual solutions.
Accident Insurance Coverage During the Company Outing
Accident insurance coverage during a company outing is an essential aspect that should not be overlooked. The scope of insurance coverage is from the official start to the end of the event, including travel to and from the venue. The insurance coverage ends after the official end of the event. It is important to inform employees about these regulations and ensure that all participants are adequately insured. Papershift provides more information on this.
Scope of Insurance Coverage
The accident insurance coverage applies throughout the entire company outing, from the official start to the end, including travel. This means that employees who have an accident during this time are covered by the accident insurance. However, it is important to note that insurance coverage ends after the official conclusion of the event. Therefore, employees should exercise extra caution after the end of the company outing.
Specific Scenarios: Correctly Consider Former & Family Members
Special Cases and Specific Issues Regarding Company Outings
Company Events and Former Employees
Involving former employees in company events can be a positive gesture, but it also raises tax questions. In principle, former employees can participate in company events, where the costs for their participation are attributed to the respective employee to whom they are related (e.g., spouse). It is important to consider this when calculating the €110 limit and, if necessary, to consider a flat-rate taxation.
Company Events and Family Members
Involvement of family members in company events is common and usually well-received. The costs for family members are attributed to the respective employee to whom they are related. This means that the costs for an employee’s spouse and children must be taken into account when calculating the €110 limit for that employee. It is crucial to consider this in planning and budgeting.
Impact of Last-Minute Cancellations on Per Head Calculation
Last-minute cancellations by employees can significantly impact the per head cost calculation. For instance, if many employees cancel at short notice, the cost per participant may increase, exceeding the €110 limit. To avoid this, it is advisable to include a financial buffer or consider a flat-rate taxation. Careful planning and communication are key to success here. Lexware provides detailed information on this.
Tax-Optimised Company Outings: Checklist for Planning
Checklist for Planning and Conducting Tax-Optimised Company Outings
Planning Steps to Adhere to Tax Regulations
To ensure a company outing is tax-optimised, several planning steps are necessary. These include budgeting with regard to the 110-euro limit, creating a detailed participant list, and documenting all costs and expenses. Careful planning and documentation are essential to present all relevant information in case of a tax audit.
Budget Planning with Regard to the 110-Euro Limit
Budget planning is a crucial step in organising a tax-optimised company outing. It's important to consider the 110-euro limit per employee and plan the budget accordingly. All cost factors should be taken into account, such as food, drinks, venue rental, music, and event managers. It's advisable to include a financial buffer to cover last-minute changes or unforeseen costs.
Creating a Detailed Participant List
A detailed participant list is essential to accurately calculate the cost per employee. The participant list should include all employees attending the outing and, if applicable, their family members. It's important to maintain the participant list carefully and document last-minute cancellations, as these can affect the per capita calculation.
Documenting All Costs and Expenses
Comprehensive documentation of all costs and expenses is essential to comply with tax regulations. All invoices, receipts, and vouchers should be carefully retained and documented. It's advisable to set up a separate account for the company outing to record all transactions clearly. In the event of a tax audit, all relevant documents must be readily available.
Communication with Employees
Open and transparent communication with employees is a key success factor in planning and conducting company outings. Employees should be clearly informed about the voluntariness of participation and the tax implications. It's advisable to conduct a survey in advance to consider the wishes and needs of the employees and to tailor the company outing accordingly.
Clear Information on the Voluntariness of Participation
It's important to clearly inform employees that participation in the company outing is voluntary. No employee should feel compelled to attend. Alternative options should be offered, for example, the possibility to continue regular work during normal working hours. Open communication and flexible solutions are the key to success here.
Information on the Tax Implications
Employees should be informed about the tax implications of the company outing, especially if the costs exceed the 110-euro limit. It's essential to clarify which costs are taxable and what options for taxation exist. Open communication builds trust and avoids misunderstandings.
Company outings: Strengthen employee retention through strategic planning
Conclusion: Company outings as a tool for employee retention and motivation, taking tax aspects into account
Summary of Key Points
Company outings are a valuable tool for employee retention and motivation. They enhance team spirit, strengthen corporate culture, and create a positive working atmosphere. Compliance with tax regulations is essential to avoid undesirable consequences. Careful planning, documentation, and communication are the keys to success. We at GoTuro are happy to support you in planning and executing your next incentive trip.
The Importance of Company Outings for the Workplace Atmosphere
Company outings play an important role in the workplace atmosphere. They offer employees the opportunity to get to know each other outside of their everyday work and to build relationships. This promotes team spirit and collaboration. A positive workplace atmosphere contributes to employee satisfaction and motivation and has a positive impact on productivity and business success. Read more on the topic here.
The Necessity of Compliance with Tax Regulations
Compliance with tax regulations is essential when planning and executing company outings. The 110-euro threshold, flat-rate taxation, and documentation obligations are important aspects to be considered. Careful planning and documentation are key to avoiding undesirable tax consequences. In case of doubt, a tax advisor should be consulted.
Outlook on Future Developments
Trends in employee events are constantly evolving. In the future, there will be a greater demand for individual and sustainable offers. Any potential changes in legislation should also be monitored to stay up-to-date and make the best use of tax advantages. We at GoTuro are always committed to offering our clients innovative and attractive offers that comply with current trends and legal requirements.
Company outings are a valuable tool to enhance employee retention and motivation. With the right planning and execution, you can provide your employees with unforgettable experiences while optimally using tax advantages.
Are you ready to plan your next company outing? Contact us today to learn more about our customised solutions. We are happy to assist you in planning and executing your next unforgettable company outing. Get in touch now!
Plan your unforgettable corporate outing with GoTuro now!
More useful links
Lexware provides detailed information on the tax aspects of company parties.
Haufe explains the tax treatment of corporate events using practical examples, especially when there are more than two events per year.
Trialog Magazin outlines the tax aspects that need to be considered when planning company parties.
Rödl & Partner provides detailed information on the 110-euro limit for corporate events.
GoKonfetti provides information on how company parties can be tax-deductible.
Das Handwerksblatt informs about what employers should consider at company parties and outings, especially regarding allowances.
Younited provides information on the topic of company outings and working hours.
Papershift offers a glossary with information on the topic of company outings.
FAQ
How often a year can we claim company outings for tax purposes?
Companies can claim a maximum of two company events per year for tax purposes. This not only includes classic company outings but also Christmas parties and summer festivals. It is important to note that this limit applies per employee.
What happens if an employee attends more than two company events?
If an employee participates in more than two events, they might have to accept individual taxation of their benefits. However, there are exceptions, e.g., for HR staff or employee representatives, whose attendance is due to their function.
What does the 110-euro limit for company outings include?
The 110-euro limit determines up to what amount the costs per employee remain tax-free. This includes food, drinks, room rental, music, and event managers. VAT must also be considered.
Which costs are not included in the calculation of the 110-euro limit?
Not included are flat-rate taxed gifts (§ 37b EStG), employer's own costs (e.g., payroll accounting), and tax-free travel expense reimbursements (§ 3 No. 13 or 16 EStG).
What happens if the costs per employee exceed the 110-euro limit?
If the costs exceed the 110-euro limit, there are two options: individual taxation and flat-rate taxation (25%). With flat-rate taxation, social security contributions on the excess amount are waived.
Can former employees and family members attend company events?
Yes, former employees and family members can also attend. The costs of their attendance are attributed to the employee with whom they are related.
What happens with short-term cancellations by employees?
Short-term cancellations can significantly affect the per-head cost calculation. It is advisable to plan for a financial buffer or consider flat-rate taxation.
Is participation in a company outing mandatory for employees?
No, participation in a company outing is generally voluntary and based on the personal rights of employees. There is no obligation to attend, especially outside regular working hours.
