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company outing cost per person
Company outing: How much per person is tax-free possible!
A successful company outing strengthens team spirit and employee motivation. But how much may a company outing cost per person to be tax-deductible? The Federal Ministry of Finance sets clear limits here. In this article, you will learn all about the allowance of 110 euros per person, the correct calculation, and how to avoid pitfalls. Do you need support planning your next company outing? Contact us for a non-binding consultation!
The topic, briefly and concisely
Use the €110 exemption per employee and event (maximum two events per year) to fully leverage the tax advantages and reduce the costs of your company outing.
Carefully document all expenses and participants to demonstrate to the tax office that the tax regulations have been adhered to and to avoid additional tax payments.
Please note the labour law aspects, particularly the voluntary nature of participation and the working hours regulations, to ensure a harmonious and successful company outing and to increase employee satisfaction.
Planning an unforgettable company outing without breaking the budget? Discover everything about the tax-free amount per person and how to optimise your costs.
Introduction to the Company Outing and its Tax Aspects
What is a Company Outing?
A company outing is more than just a pleasant gathering; it is an essential tool for enhancing team spirit and boosting employee motivation. It provides a welcome break from daily work routine and allows colleagues to get to know each other better in a relaxed environment. Through informal exchanges outside the office, relationships can be strengthened and collaboration improved. At GoTuro, we understand how important such experiences are for a positive work atmosphere.
Why is the tax treatment important?
The tax treatment of company outings is a crucial factor that is often overlooked. Proper handling of tax regulations is essential to avoid unexpected tax burdens for both the employer and the employees. Compliance with legal requirements not only ensures the tax benefit of the outing but also provides transparency and legal certainty. Otherwise, the costs could quickly escalate. Personio.de offers helpful information on this.
When planning a company outing, it is therefore advisable to consider the tax aspects early on. This includes being aware of the current allowances, considering all relevant costs, and properly documenting the expenses. Only in this way can you ensure that your company outing is not only a great success for your employees but also optimally structured for tax purposes.
110 Euro tax exemption: Maximising tax advantages optimally
The 110-Euro Limit: Allowance vs. Exemption Limit
The 110-Euro Allowance in Detail
The 110-Euro Allowance is a central concept related to the tax treatment of company outings. Up to this amount, the costs incurred per participating employee are tax-free. This allowance is intended to enable companies to offer their employees unforgettable experiences without financial burden. It is important to note that this is an allowance, not an exemption limit. Lexware explains the details.
What is the difference between an allowance and an exemption limit?
The difference between an allowance and an exemption limit is crucial for correct tax treatment. With an allowance, only the amount that exceeds the allowance is subject to tax. For example, if costs per employee exceed the 110-Euro allowance by 20 Euros, only these 20 Euros are taxable. In contrast, an exemption limit means that the entire amount becomes taxable as soon as the limit is exceeded. If the 110-Euro rule were an exemption limit, all 130 Euros would need to be taxed in the example mentioned. It is thus important to understand this difference to correctly assess the tax implications. Chamber of Commerce Bonn provides an informative document on this.
What costs are included in the 110-Euro limit?
The 110-Euro limit includes all costs incurred by the employer in connection with the company outing. This does not only cover obvious expenses like entrance fees, catering, and transport, but also the costs for organising the event. Costs for an event manager or venue hire are also covered by this regulation. It is important to consider all these costs to correctly calculate the total cost per employee. At GoTuro, we ensure all relevant costs are transparently listed so that you maintain an overview.
Particular attention should be paid to the inclusion of accompanying persons. If employees bring their spouse or partner, the costs for these accompanying persons are attributed to the respective employee. This can quickly lead to the 110-Euro limit being exceeded. It is therefore advisable to keep an eye on the costs for accompanying persons when planning the company outing and to seek alternative solutions if necessary to make the most of the tax advantages.
Precisely determine and tax costs per employee
Calculation of cost per employee
How are the total costs determined?
To correctly calculate the cost per employee, a comprehensive record of all expenses is initially required. This includes all the costs the employer incurs in connection with the company outing. This not only covers direct costs like transportation, meals, and entrance fees, but also indirect costs like planning, organisation, and potential rental costs for venues. A detailed itemisation of all expenses is the basis for an accurate calculation. Tagewerk-Events provides useful tips on this.
Distribution of costs among participants
Once the total costs have been determined, they need to be distributed among the employees who actually participate. It is important to note that only employees who actually participate are counted, not just those invited. For example, if 50 employees are invited but only 40 participate, the total costs are divided by 40 to determine the cost per employee. This cost distribution is crucial for correct tax treatment. A participant list is essential in this process.
Examples of cost calculation
To illustrate the cost calculation, we consider two scenarios. In the first scenario, the cost per employee is below 110 euros. In this case, all costs are tax-free, and there are no further tax implications. In the second scenario, the costs per employee exceed the 110-euro threshold. In this case, the excess amount is taxable or can be taxed at a flat rate. The choice of taxation method depends on various factors, such as the number of employees and the amount of the excess. Teamgeist offers more information on this.
At GoTuro, we are happy to assist you with the detailed cost calculation and help you find the tax-optimal solution for your company outing. We consider all relevant factors and ensure a transparent and comprehensible breakdown of costs.
Minimising Tax Burden: Options When Exceeding the 110-Euro Threshold
Tax treatment when exceeding the 110 euro limit
Options for the employer
If the costs per employee exceed the 110 euro limit, the employer has various options to manage the tax treatment. One possibility is the individual taxation of the excess amount. In this case, the excess amount is taxed individually as a monetary benefit. Alternatively, the employer can tax the excess amount at a flat rate of 25% (plus solidarity surcharge and church tax). This option leads to social security exemption for the amount. Haufe.de explains the details.
Advantages of flat-rate taxation
The flat-rate taxation offers several advantages over individual taxation. Firstly, it significantly simplifies the billing process since the employer can tax the excess amount at a flat rate without having to consider individual tax rates for employees. Additionally, the flat-rate taxation results in the social security exemption of the amount, which is beneficial for both the employer and the employee. At GoTuro, we are happy to advise you on which taxation method is most suitable for your company.
Key Benefits of Pauschale Versteuerung
Here are some of the key benefits you'll gain:
Simplified Billing: Flat-rate taxation significantly simplifies the billing process as no individual tax rates need to be considered.
Social Security Exemption: The flat-rate taxed amount is exempt from social security, which is advantageous for both employers and employees.
Planning Certainty: Flat-rate taxation provides planning certainty as the tax burden is known in advance.
Document securely for the tax office and save taxes
Documentation and Record-Keeping Obligations
Why is careful documentation important?
Careful documentation is essential to provide evidence to the tax office regarding the tax treatment of the company outing. The tax office requires detailed proof of the costs incurred and the employees who participated. Without comprehensive documentation, you risk that the tax benefits will not be recognised, and you may have to pay additional taxes. Lexware emphasises the importance of documentation.
What needs to be documented?
The documentation should at least include the following elements: A list of participants signed by all attending employees. This list serves as proof of who actually participated in the company outing. Furthermore, all invoices and receipts that arose in connection with the company outing must be kept. This includes, for example, invoices for transport, catering, admission fees, and room rental. Additionally, a detailed cost breakdown per employee is required, showing how the total costs are distributed among the individual participants. At GoTuro, we are happy to assist you in creating a complete and audit-proof documentation.
Comprehensive documentation is important not only for the tax office but also for your own accounting. It allows you to accurately record the costs of the company outing and optimise the tax advantages.
Avoid common mistakes and secure tax advantages
Common Mistakes and How to Avoid Them
Errors in Cost Calculation
When calculating the costs for a company outing, mistakes can easily occur, leading to tax disadvantages. A common mistake is the failure to account for all expenses. Often, only direct costs such as transport and catering are considered, while indirect costs like planning and organisation are forgotten. Another mistake is the incorrect allocation of costs. It's important to allocate the costs only to employees who actually participate, not to all invited. Die IHK Bonn warns against such mistakes.
Errors in Documentation
Errors can also occur in documentation, which can have costly consequences. A common mistake is the absence of a participant list. Without a signed participant list, the tax office cannot verify the actual attendance of employees. Another mistake is incomplete receipts. It is crucial to keep all invoices and receipts to substantiate the incurred costs. At GoTuro, we help you avoid these mistakes and create comprehensive and audit-proof documentation.
Other Pitfalls
Apart from errors in cost calculation and documentation, there are other pitfalls to avoid. A common mistake is the invitation of business partners. The costs for business partners are not part of the company outing and cannot be claimed for tax purposes. Another mistake is holding more than two events per year. Only two events per year can be tax-favoured. Therefore, it is crucial to keep an eye on the number of events and maximise the tax benefits. Personio.de offers further information on this topic.
Employment Law Aspects: Consider Voluntariness and Remuneration
Labour Law Aspects of the Company Outing
Voluntary Participation
Participation in a company outing is generally voluntary. No employee can be forced to take part in a company outing. However, an exception exists if the outing occurs during regular working hours. In this case, the employee must either participate in the outing or work. Emphasising the voluntary nature of participation is important to foster a positive working environment. Younited.de explains the details.
Working Hours and Compensation
The question of whether a company outing counts as working time and must therefore be compensated depends on various factors. If the outing takes place during working hours, it is considered working time and will be compensated accordingly. However, if the outing takes place outside working hours, it is generally not compensated. Transparent communication of these regulations is crucial to avoid misunderstandings. At GoTuro, we are happy to advise you on the labour law aspects of your company outing.
Insurance Coverage
During the official duration of the company outing, accident insurance coverage is provided for participating employees. This protection also includes the journey to and from the outing. It is important to inform employees about the existing insurance coverage to give them a sense of security. After the official end of the company outing, the accident insurance coverage also ends. Younited.de offers further information on this matter.
Adhering to the labour law aspects is crucial for a successful and harmonious company outing. By considering the voluntary nature of participation, working time regulations, and insurance coverage, you can ensure that your outing is optimally structured from both a tax and labour law perspective.
VAT Aspects: How to Make the Most of Input Tax Deduction
VAT Aspects
Input Tax Deduction
The input tax deduction is a crucial aspect of the VAT treatment of company outings. In principle, input tax deduction is possible if the expenses for the company outing are predominantly in the business interest. This is generally the case if the company outing serves to promote team spirit and employee motivation. However, the input tax deduction is restricted if the expenses predominantly serve the private needs of the employees. The IHK Bonn explains the details.
110-Euro Limit as an Indicator
The 110-Euro limit also serves as an indicator of whether the company outing is primarily in the business interest. If the costs per employee do not exceed the 110-Euro limit, it is generally assumed that the company outing is predominantly in the business interest and the input tax deduction is permissible. However, if the costs exceed the 110-Euro limit, this can be an indication that the company outing predominantly serves the private needs of the employees and the input tax deduction is restricted. Therefore, it is important to keep an eye on the costs and carefully examine the tax implications. At GoTuro, we are happy to assist you in the VAT assessment of your company outing.
The correct VAT treatment of company outings is complex and requires a careful examination of the individual circumstances. By considering input tax deduction possibilities and adhering to the 110-Euro limit, you can ensure that your company outing is not only a complete success for your employees but also optimally structured in terms of VAT.
Company outings: Save taxes with planning and expertise
More useful links
Personio.de provides helpful information about the tax treatment of company outings.
Lexware explains details about the 110-Euro allowance for company outings.
The IHK Bonn provides an informative document on the topic of allowances and thresholds.
Haufe.de explains the details of flat-rate taxation when the allowance is exceeded.
FAQ
How much is a company outing allowed to cost per person to benefit from tax advantages?
The tax-free allowance is 110 euros per participating employee for a maximum of two company outings per year. This amount covers all costs incurred by the employer.
What happens if the costs per person exceed the 110-euro limit?
If the costs exceed the allowance of 110 euros, the exceeding amount is taxable. The employer can choose to tax this amount individually or at a flat rate of 25% (plus solidarity surcharge and church tax).
What costs are included in the 110-euro allowance?
The allowance covers all costs associated with the company outing, including transportation, catering, entrance fees, organisation, and any rental costs.
Do all employees have to participate in a company outing?
Participation in a company outing is generally voluntary. An exception applies if the outing takes place during regular working hours.
How must a company outing be documented to secure tax advantages?
Meticulous documentation is essential. This should include a list of participants (signed by all attendees), all invoices and receipts, as well as a detailed breakdown of costs per employee.
Is the 110-euro allowance applicable per event or per year?
The 110-euro allowance applies per participating employee and event, but only for a maximum of two events per year.
What happens to the costs if an employee brings their partner/spouse?
The costs for the accompanying person are allocated to the employee and thus increase the total costs per employee.
Are company outings considered working time?
If the company outing takes place during regular working hours, it counts as working time and is remunerated accordingly. If it occurs outside working hours, it is generally not compensated.
