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New case law from the Bundesfinanzhof (BFH) dated 16 May 2013:
General principle: Company events such as Christmas parties, company outings, etc. are deemed to be predominantly in the employer's own business interest. Such expenses are therefore not allocated to wages, provided the threshold of EUR 110.00 per person (limited to two events per year) is not exceeded.
Which costs must be included when calculating the EUR 110.00 threshold per employee?
In the past, all costs had to be included, such as travel costs to the event, room rental, fees for event organisers, etc. According to the current case law of the BFH dated 16 May 2013, VI R 94/10 and VI R 7/11, these costs no longer need to be included in the EUR 110.00 threshold.
Only those costs by which the employee is objectively enriched are to be included in this threshold. These are limited to the benefits that the participating employee can directly consume, such as food, drinks or musical performances.
The BFH also treats costs for accompanying family members more generously than before: only those costs directly attributable to the employee are to be allocated to them, not the costs attributable to attending spouses or partners. The BFH thus focuses only on those services that the participating employee directly receives. Costs attributable to accompanying family members may no longer be allocated to the employee, meaning that the EUR 110.00 threshold is granted separately for each partner.
Please note: The revised BFH case law applies in your favour to all cases that are still open, i.e. also for past periods!
We are happy to provide further information. Your Steffen & Partner Gruppe, your Steuerberater (German Certified Tax Advisor) in Bocholt, Düsseldorf and Bad Salzuflen.
Frequently asked questions
Frequently asked questions
What allowance applies to company events such as Christmas parties?
Expenses for company events remain exempt from wage tax if the allowance of EUR 110 per employee and event is not exceeded. A maximum of two events per year qualify for this benefit. If the limit is exceeded, the entire amount must be taxed as wages.
Which costs must be included in the 110-EUR exemption threshold under the BFH ruling of 16 May 2013?
According to the new case law (BFH VI R 94/10 and VI R 7/11), only those costs are to be included that provide an objective benefit to the employee. This covers items the employee can directly consume, e.g. food, beverages and musical performances. Travel costs, room rentals or fees for event organizers no longer count.
How are costs for attending spouses handled with regard to the EUR 110 threshold?
According to recent BFH case law, only benefits the employee receives directly are attributed to them. Costs allocated to attending spouses or partners may no longer be attributed to the employee. As a result, the EUR 110 threshold applies separately to each partner.
Does the new BFH case law on company events also apply retroactively?
Yes, the revised case law applies to all cases that are still open and therefore also benefits employers for past periods. It may thus be worthwhile to review company events previously treated as taxable.
Why are company events generally not considered wages?
Company events such as Christmas parties or company outings primarily serve the employer's own operational interests, for example to foster a positive workplace atmosphere. As long as the exemption threshold of EUR 110 per person is observed, no taxable wages arise.