New allowance for company celebrations

Craft businesses that organize company outings, Christmas parties, or summer festivals for their employees must observe important changes in tax law:

This article is part of the special feature on company parties and company outings: What employers should pay attention to

Costs to be included: The costs of a company event do not include all overhead costs, but only those costs incurred by the employer for the external framework of the company event. This includes, in particular, venue costs and costs for an event organizer (event manager). The employer's calculated costs are not included.

The costs for an employee’s companion (spouse, children) are charged to the employee.

Target group: According to the amendment to the law, employers' benefits for employees and their companions at company events are considered income from employment. For company events open to all members of the company or a part of the company (this is new), an allowance of €110 per employee applies. A part of the company is defined as an organizational unit of some significance and size.

The allowance can only be claimed for up to two events per year.

You might also be interested in:

Operations management

The €150 duty-free allowance is being abolished: New customs duty applies from July.

The Chambers of Skilled Crafts in Germany - HWK Münster

Craftsmen face higher tax burden

Allowance instead of exemption limit

Important for employees: The previous exemption limit of €110 will be converted into a tax-free allowance, meaning that exceeding the limit no longer results in the employee being subject to income tax on the entire amount. Only the excess portion is taxable wages.
 
The new regulation came into force on January 1, 2015, and does not apply to all open cases.

Source: ZDH

For example:

At a craft business's summer party in a restaurant, 30 employees are present.

The invoice totals €3.150,00 plus VAT. The tax-free allowance of €110,00 already includes VAT.

The amount exceeding the exemption limit is therefore subject to tax:

3.150,00 Euro * 19% VAT = 598,50 Euro = Total amount 3.748,50 Euro 

EUR110,00 Euro * 30 people = 3.300,00 Euro 3.748,50 Euro / 30 = 124,95 Euro benefits in kind per employee.

This means that €14,95 is subject to tax. Payroll tax can be applied at a flat rate of 25 percent. This amount is exempt from social security contributions.

Source: Sigurd Harder Tax Advisor