Until now, employer expenses for up to two company events per year are exempt from tax and social security contributions up to EUR 110 (including VAT) per event and per employee. Caution: This is a so-called exemption threshold, meaning that just one cent above this amount renders the entire sum subject to tax and social security contributions. The previous administrative regulation is to be incorporated into statutory law and increased to EUR 150 starting in 2015. This sounds favourable at first, but a closer look reveals that the new rules also require the inclusion of costs for family members as well as costs for items such as venue rental or event agencies. This is the case even though the BFH only recently ruled that such costs are not to be included within the exemption threshold. Unfortunately, the ministerial draft explicitly excludes this favourable case law from 2015 onwards.
Frequently asked questions
Frequently asked questions
What is the current exemption limit for company events?
Employer expenses for up to two company events per year remain free of tax and social security contributions up to EUR 110 (including VAT) per event and employee. This is an exemption limit (Freigrenze), not an allowance (Freibetrag) — meaning the entire amount becomes taxable if the threshold is exceeded.
What does the exemption limit (Freigrenze) mean for company events?
An exemption limit (Freigrenze) means that even a single cent in additional expense per employee causes the entire amount to become subject to tax and social security contributions. Therefore, it is not just the excess portion that is taxed, but the complete benefit.
How is the exemption threshold for company celebrations set to change from 2015?
The plan is to enshrine the previous administrative regulation in law and to raise the exemption threshold from EUR 110 to EUR 150 per event and per employee. At first glance, this increase appears generous.
Which costs must be included in the threshold under the planned new rules?
Unlike before, the threshold is set to include costs for family members as well as overhead costs such as room rentals or fees for event agencies. As a result, the increase to EUR 150 will in many cases be effectively offset.
How does the new regulation affect the BFH case law on company events?
The Bundesfinanzhof had ruled that costs for venue rentals, event agencies and similar overhead expenses are not to be included in the tax-free threshold. However, the ministerial draft bill expressly excludes this employee-friendly case law from 2015 onwards.