In its judgment of 19 March 2014 (Az.: 1 K 3541/12), the 1st Senate ruled that expenses for a celebration held simultaneously on the occasion of a milestone birthday and the passing of a professional examination are not deductible as work-related expenses in their entirety. In the case at issue, the plaintiff had been appointed as a Steuerberater (German Certified Tax Advisor) shortly before his 30th birthday after passing the examination. On the occasion of both events, he had hosted a celebration in a function hall, to which he had invited not only colleagues from work but also relatives and acquaintances. Relying on the revised case law of the BFH on the apportionment of mixed-purpose expenses (cf. BFH order of 21 September 2009, 1 GrS 1/06), he sought to claim the costs of the celebration attributable on a per-person basis to his work colleagues as work-related expenses against his income from employment. The 1st Senate did not follow this view. Weighing all the circumstances, the expenses for the celebration were privately motivated as a whole. The plaintiff had made a selection within his circle of colleagues. In addition, more private guests than work colleagues had attended the celebration. Finally, with his colleagues, the plaintiff had not only celebrated his professional examination, but also his birthday — a private event. In such cases, an allocation of the costs is not possible. The Senate has allowed an appeal to the BFH under Az.: VI R 46/14.
Frequently asked questions
Frequently asked questions
Are the costs of a party celebrating a milestone birthday and a professional examination partially deductible as work-related expenses?
No. In its ruling of 19 March 2014 (Az. 1 K 3541/12), the Finanzgericht Baden-Württemberg held that the expenses for a celebration with a dual occasion are entirely privately motivated if a private event such as a milestone birthday is also being celebrated. In such cases, the costs cannot be split into a professional and a private portion.
Which criteria argue against a professional occasion for a mixed celebration?
Factors that argue against a professional occasion include, in particular, an individual selection of the invited colleagues, a predominance of private guests over colleagues, and the fact that a private event such as a birthday is being celebrated together with the colleagues. After weighing these circumstances, the celebration may be classified as privately motivated overall.
Following BFH case law on mixed expenses, can every celebration be apportioned?
No. While the BFH ruling of 21 September 2009 (GrS 1/06) generally permits the apportionment of mixed-purpose expenses, this requires objective allocation criteria and clear separability. According to the FG Baden-Württemberg, the costs of celebrations serving both a professional and a private occasion cannot be separated.
What role does the composition of guests play in the tax assessment of a celebration?
The composition of guests is a key indicator: if only a personal selection of colleagues is invited and private guests predominate, this suggests a private occasion. By contrast, if all colleagues or an objectively defined group (e.g. by function) are invited, a professional occasion is more likely to be assumed.
Is an appeal possible against the ruling on the dual-occasion celebration?
Yes, the Finanzgericht Baden-Württemberg (Tax Court) allowed an appeal to the Bundesfinanzhof (Federal Fiscal Court), which was pending there under case no. VI R 46/14. Until a decision by the highest court is issued, comparable cases should be kept open.