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Allowances – Company events – No remuneration – Cancellation – Employees

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Expenses incurred by the employer on the occasion of company events are generally subject to income tax for employees as non-cash benefits; however, benefits of up to EUR 110 each for up to two company events per year remain tax-free (see Section 19 (1) no. 1a EStG). In doing so, the tax authorities allocate the expenses incurred to the participating employees (and, if applicable, their participating dependents) and distribute the expense accordingly.

If individual employees are unable to attend a company event at short notice (e.g. due to illness), the expenses attributable to the non-participating employees are allocated to those present.

This view has now been contradicted by a tax court. Accordingly, the expenses attributable to the employees who are not present do not constitute taxable wages in total.

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50 employees are invited to a Christmas party. At short notice 10 employees have cancelled. Expenses for food, room rental, music, etc. amount to € 4,000. The cost of the buffet could not be reduced because of the cancellations. The participating employees incurred beverage costs of €1,200.

In the opinion of the tax authorities, the fixed costs would have to be distributed among the persons present
(4,000 € : 40 = 100 €); plus beverage costs
(1,200 € : 40 = 30 €), this results in 130 € per participant; after deduction of the tax-free amount, (130 € / 110 € =) 20 € per participant would be subject to income tax.

In the opinion of the tax court, only
(4,000 € : 50 =) 80 € fixed costs and 30 € beverage costs for each participating employee. Since the tax-free amount of €110 is not exceeded in this case, no income tax would be due.


It may therefore be advisable to document when costs for a company party are incurred by employees who ultimately do not attend.

Since the FG decision is not yet final, the appeal to the Federal Fiscal Court may have to be awaited.

(For further comments and information, please see our Information Letter 12/2018).

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Neumann & Walczak – tax consulting company GmbH – Robert-Bosch-Strasse 1 – 59439 Holzwickede

Neumann & Walczak Tax Consultants – Partnership –
Robert-Bosch-Strasse 1 – 59439 Holzwickede

Website: www.neumann-walczak.de – E-mail: info@neumann-walczak.de

Phone: (0049) 02301 – 91 291 0 – Fax: (0049) 02301 – 91 291 21