"Where high-quality advertising calendars are given to identifiable recipients, this does not constitute an advertising measure but a gratuitous benefit subject to record-keeping obligations." (FG Baden-Württemberg 12 April 2016, 6 K 2005/11)
The proceedings concerned pictorial wall calendars that had been produced for many years and bore the company logo. In the year in dispute, costs of approximately EUR 175,000 were incurred for around 15,000 calendars, which were booked as advertising expenses.
In the view of the tax authorities, however, these are not advertising expenses but gifts within the meaning of § 4 (5) EStG. The deduction as business expenses was denied because the expenditure had not been recorded separately from the other business expenses. The plaintiff's objection and legal proceedings were unsuccessful.
The advertising effect achieved through the gratuitous transfer of the calendars does not qualify as consideration for the benefit. Since the unit price was only around EUR 12.00, however, the gift threshold of EUR 40.00 per recipient per year was in principle observed. Because advertising gifts of higher value are presumed to imply a personal relationship with the recipients, separate record-keeping is required in order to claim these costs as business expenses. This was not done in the case at issue.
Practical Tip
In principle, gifts are benefits granted without consideration – that is, gratuitously – which enrich the other party. A distinction must be drawn, however, as to whether the gifts were granted in connection with another service. In the case of supplements to so-called main services, the two transactions are linked and together form part of the exchange of services. In such cases, the character of a gift is therefore not present.
Frequently asked questions
Frequently asked questions
Are promotional calendars with a company logo tax-deductible advertising costs or gifts?
According to the ruling of the FG Baden-Württemberg (12.4.16, 6 K 2005/11), providing high-value promotional calendars free of charge to identifiable recipients does not qualify as an advertising measure but as a gift within the meaning of §4 Abs. 5 EStG. The imprinted company logo is not considered consideration provided by the recipient. As a result, the strict rules for gifts to business associates apply.
What recordkeeping requirements apply to promotional gifts such as calendars?
Gifts to business associates must be recorded individually and separately from other business expenses (§4 Abs. 7 EStG). If this obligation is breached, the business expense deduction is denied even when the 40-euro threshold is observed. In the case decided, the deduction of roughly 175,000 euros failed precisely because of this missing separate recordkeeping.
Does the EUR 35 gift limit also apply to promotional calendars featuring a company logo?
Yes, the gift limit per recipient and year must also be observed for promotional calendars. In the case decided, the unit price was around EUR 12 and thus below the threshold. However, staying within the value limit alone does not safeguard the business expense deduction – the record-keeping requirements must also be met.
When does a gift exist for tax purposes?
A gift is a gratuitous benefit that enriches the recipient without any consideration in return. However, if the benefit is granted as an add-on to a main service and is linked to it within an exchange of services, the gift character is absent. In this case, the deduction restrictions under § 4 Abs. 5 EStG do not apply.
Why does the advertising imprint not qualify as consideration for the calendar?
The advertising effect achieved by distributing the calendar does not legally qualify as consideration provided by the recipient. The recipient does not render any service in return but merely accepts the calendar free of charge. As a result, the transaction remains a unilateral, gratuitous benefit that must be classified as a gift.