Employers have an option regarding the taxation of promotional giveaways: Oberste Finanzdirektion (OFD) Karlsruhe dated 18.12.2015
According to a new administrative directive issued by OFD Karlsruhe, employers have the following options regarding the taxation of promotional giveaways:
- Provided that the acquisition or production costs of the items, which qualify as benefits in kind, do not exceed EUR 10, these are considered so-called "promotional giveaways" and therefore do not need to be included in the flat-rate taxation, nor taxed pursuant to § 37b EStG.
- If wage taxation is carried out in the regular manner, the items no longer qualify as "promotional giveaways" in the above sense. This means that benefits in kind provided to employees are only exempt from taxation if they do not exceed the monthly exemption limit of EUR 44 in total (§ 8 Abs. 2 S. 11 EStG). If this exemption limit is exceeded (for example, when multiple benefits in kind are granted), all benefits in kind must be subjected to regular wage taxation.
- According to a BMF letter dated 19.05.2015, promotional giveaways may be taxed at a flat rate if doing so would otherwise cause the EUR 44 monthly limit to be exceeded. Thus, the employer may subject a "promotional giveaway" to flat-rate taxation even when the EUR 44 limit is exceeded, in order to keep other benefits in kind tax-free. It is important to note that the employer may assess each low-value benefit in kind, i.e. each "promotional giveaway" up to EUR 10, separately, meaning the decision on flat-rate taxation does not need to be made uniformly for all "promotional giveaways".
Frequently asked questions
Frequently asked questions
What qualifies as a promotional giveaway for tax purposes?
Promotional giveaways are non-cash gifts whose acquisition or production costs do not exceed EUR 10.00. Such low-value advertising items do not have to be included in the flat-rate taxation under § 37b EStG and therefore generally remain untaxed.
How does the EUR 44 tax-free threshold affect benefits in kind granted to employees?
Benefits in kind granted to employees remain tax-free only if their total monthly value does not exceed the EUR 44 threshold under § 8 Abs. 2 S. 11 EStG. If this threshold is exceeded — for example, due to multiple benefits within the same month — all benefits in kind must be subject to regular wage tax.
Can promotional giveaways be subject to flat-rate taxation to preserve the EUR 44 threshold?
Yes. According to the BMF circular dated 19 May 2015, the employer may subject a promotional giveaway to the flat-rate tax under § 37b EStG even if this would otherwise cause the EUR 44 monthly threshold to be exceeded. This allows other benefits in kind to be granted tax-free within the threshold.
Must the decision on flat-rate taxation be made uniformly for all promotional giveaways?
No. The employer may assess each low-value benefit in kind up to EUR 10 separately and decide individually whether to apply flat-rate taxation. A uniform treatment of all promotional giveaways is not required.
What option does the employer have when taxing promotional giveaways?
For promotional giveaways up to EUR 10, the employer may treat them as tax-free, apply regular wage taxation, or use the flat-rate taxation under § 37b EStG. According to the OFD Karlsruhe ruling of 18 December 2015, this option can be exercised separately for each individual low-value benefit in kind.