Facts of the case: An authorized automobile dealer organized an amateur golf tournament series, acting as host and being responsible for selecting and inviting the participants. The host covered the costs for course bookings and green fees as well as hospitality expenses, and additionally distributed minor gifts in kind.
Assessment of the expenses by the BFH: The OFD Frankfurt/M. had to assess whether, in the case of authorized automobile dealers, the expenses for organizing golf tournaments are to be classified as non-deductible business expenses within the meaning of § 4 Abs. 5 S. 1 Nr. 4 EStG, or whether the sponsoring aspect predominates in these expenses, meaning that the sponsoring decree of 18 February 1998 would apply (OFD Frankfurt/M. of 30 June 2016 – S 2145 A – 11 – St 210). The OFD classified the expenses as non-deductible expenses subject to the deduction prohibition under § 4 Abs. 5 S. 1 Nr. 4 EStG. The Bundesfinanzhof (BFH) concurred with the view of the OFD in its judgment of 16 December 2015 (Az. IV R 24/13).
Source: BFH online
Frequently asked questions
Frequently asked questions
Are expenses for hosting golf tournaments tax-deductible?
No, expenses for hosting golf tournaments are non-deductible business expenses pursuant to § 4 Abs. 5 S. 1 Nr. 4 EStG. This applies even if the organizer covers the costs for course bookings, green fees, catering, and minor gifts. The BFH confirmed this position in its ruling of 16.12.2015 (Az. IV R 24/13).
Does the sponsoring decree of 18 February 1998 apply to expenses for golf tournaments?
No, the sponsoring decree does not apply to expenses for organising your own golf tournaments. The sponsoring rationale is not the primary purpose here, since the taxpayer acts as the organiser and selects the participants. Such expenses are therefore subject to the deduction prohibition under § 4 Abs. 5 S. 1 Nr. 4 EStG.
Which cost categories of a golf tournament fall under the deduction ban of § 4 Abs. 5 S. 1 Nr. 4 EStG?
The deduction ban covers in particular green fees and course booking fees, hospitality costs for participants, and small gifts in kind to the players. All of these expenses qualify as expenditures for purposes similar to hunting, fishing, or sailing/motor yachts and are therefore not tax-deductible.
What is the significance of the BFH ruling of 16 December 2015 (IV R 24/13) for authorized automobile dealers?
The BFH confirmed that authorized automobile dealers hosting amateur golf tournaments for clients cannot deduct the related expenses as business expenses. Reclassification as sponsoring or advertising costs is not permitted. The expenses are fully subject to the deduction prohibition under § 4 Abs. 5 S. 1 Nr. 4 EStG.