For company events, a tax-free allowance of EUR 110 per event and participant may be claimed for two events per year for wage tax and social security purposes. Only employer expenses exceeding this allowance are subject to wage tax and social security contributions. In addition, favourable flat-rate taxation options are available. In principle, the employer may also claim an input VAT deduction for expenses relating to a company event. This applies at least where the event is held predominantly in the employer's business interest. This is the case, for example, with mandatory work events that also include catering, but not with company outings or Christmas parties.
In a case decided by the BFH in 2023, the issue concerned a group cooking event held as part of a Christmas party. The BFH held that, in principle, no input VAT deduction was available for these expenses, as they had been incurred for the private sphere of the employees. The BFH considers an input VAT deduction on the costs to be possible only if the expenses for the private sphere of the employees do not exceed a threshold (Freigrenze) of EUR 110 per event, since in that case the expenses qualify merely as a token gift (Aufmerksamkeit).
Note
Different rules therefore apply to company events with regard to income tax and VAT. For income tax purposes, the EUR 110 figure is a tax-free allowance (Freibetrag). Up to this amount, the benefits granted to employees do not constitute a taxable benefit in kind. For VAT purposes, however, a threshold (Freigrenze) applies for preserving the input VAT deduction from the expenses for the company event. If this threshold is exceeded, the input VAT deduction for the expenses is lost in full.