Facts of the case:
In the present case, the plaintiff, a tax official, had invited all members of Tax Office A as well as the employees of the Tax Office for Large Business Audits also working in the office building (approximately 50 guests in total) to celebrate his 40-year work anniversary on a weekday from 11:00 a.m. to approximately 1:00 p.m. The office management approved the celebration, and the venue was the staff room of Tax Office A.
The plaintiff claimed the expenses for the celebration in the amount of approximately EUR 830 as work-related expenses against his income from employment. The competent tax office denied the deduction on the grounds that the hospitality expenses were to a significant extent attributable to private circumstances relating to the taxpayer's personal lifestyle. The action before the fiscal court was likewise unsuccessful: the court adopted the tax office's position and denied the deduction of the expenses for income tax purposes.
Decision of the Bundesfinanzhof (BFH):
The tax official pursued the case all the way to the BFH. In its ruling of 20 January 2016 (IV R 24/15), the court held that the assessment of whether the expenses are privately or professionally motivated must primarily be based on the occasion of the celebration. In the BFH's view, the plaintiff's hospitality expenses were therefore not, or only insignificantly, attributable to private circumstances relating to the taxpayer's personal lifestyle and were exclusively or almost exclusively professionally motivated.
This followed, on the one hand, from the professional occasion of the celebration (= work anniversary) and, on the other hand, from the guests, who were, without exception, members of the office — i.e. professional colleagues.
In addition, the event took place — at least in part — during working hours.
The BFH therefore upheld the action and ruled that the total costs of EUR 830 (i.e. approximately EUR 17 per person) were deductible as work-related expenses for income tax purposes.
Frequently asked questions
Frequently asked questions
Are expenses for a work anniversary celebration deductible as income-related expenses?
Yes, expenses for celebrating a work anniversary can be deducted as income-related expenses from income from employment, provided they are almost exclusively work-related. In its ruling of 20 January 2016 (Az. VI R 24/15), the BFH clarified that a work anniversary is generally a professional occasion and not a predominantly private matter.
Which criteria are decisive in determining whether a celebration is professionally motivated?
The key factors are the occasion of the celebration, the group of invited guests, and the location and timing of the event. If only work colleagues are invited, the celebration takes place on the employer's premises, and it occurs at least partly during working hours, this indicates a professional motivation.
Does the guest list affect the deductibility of hospitality expenses?
Yes, the guest list is a key indicator. If only professional colleagues or office members are invited, and no private friends or family, this points to a business-related purpose. Any private co-motivation then becomes secondary.
What significance do the venue and timing of the celebration have for the deduction of work-related expenses?
If the celebration takes place on the employer's premises and occurs wholly or partly during regular working hours, this is a strong indicator of professional motivation. These circumstances clearly distinguish a work anniversary celebration from a private birthday party.
How high may the costs per person be for an anniversary celebration?
In the case decided, the BFH considered costs of approximately EUR 17 per person with around 50 guests to be unobjectionable. There is no fixed upper limit, but expenses should remain within a reasonable range and not exceed what is customary in a professional context.