Companies should keep this in mind at their Christmas party
Employers have the option of organising corporate events — including the Christmas party — tax-free. Even gifts to employees can be given tax-free as part of these events. However, certain requirements must be observed. How does it work and what should employers know?
1. Company events: The tax allowance
In accordance with legal regulations and the statements of the Federal Ministry of Finance, employers can set up to 110 euros per employee and event tax-free. This allowance covers all costs, including catering, room rental and entertainment programs. An ideal opportunity to take advantage of the tax benefits right away for the Christmas party.
Important: If the allowance is exceeded, the additional costs must be subject to income tax.
2. Gifts at the Christmas party
In addition to tax-free food and entertainment at company parties, employers can also present gifts to their employees. These gifts in kind are also tax-free, provided they are presented as part of the company event. Employees who are unable to attend the Christmas party may also receive the gifts retrospectively.
A quick example: The cost of the Christmas party is 80€ per person. This 80€ already covers food, drinks, room rental and, if necessary, an entertainment program. In this scenario, it is possible to give each employee an additional gift worth up to €30 in order not to exceed the exemption limit of €110.
With the regional benefits card From Regional Hero, this is particularly easy. On the one hand, companies have the option of scheduling an additional recharge via our HR portal. For example, all employees will receive a small push notification with a Christmas greeting on their mobile phones just in time at the start of the speech, including a top-up of their benefits card. That would be a nice idea, wouldn't it?
Alternatively, with Regional Hero, companies can also use our City vouchers order. The respective teams receive pre-loaded gift cards, which they can add to their Regional Hero app in just a few steps. The gift is therefore ready for use in just a few minutes.
Our city vouchers can be used by Regional Hero customers with a payment card in a predefined region.
For interested companies without a cash card, we currently offer our popular city vouchers for Berlin and Munich.
Important: All costs that exceed the allowance of 110€ must be taxed accordingly. For example, if expenses are 130€ per employee and event, 20€ must be taxed at a flat rate of 25%.
3. Attention when giving gifts for personal occasions
In addition to regular benefits in kind of up to €50 per month, employers have the option of paying their employees an additional €60 as benefits in kind up to 3 times a year. However, there are a few points to consider to ensure that the benefits remain tax-free.
- The value of the gifts must not exceed 60 euros (gross) per occasion; otherwise, the entire gift is taxable.
- The gifts must be paid out in the form of vouchers, credit cards or cash cards. These may only entitle you to purchase goods or services and may only be redeemed domestically.
- The contributions must have a personal reason, which can be both private and operational. Typical examples include the birth of a child, a wedding or a birthday once a year. In a professional context, a change in function or the departure of employees is possible. However, this also means that Christmas is not considered a personal occasion. We have already explained in Section 2 how gifts to employees during the Christmas party remain tax-free.
4. Recording obligations and requirements
In order to claim tax exemption, companies should document the costs per employee and participation. This not only makes tax reporting easier, but also helps to meet the requirements of the tax office. The allowance is fixed per person and event, which means that it can be useful to divide the costs, for example for family members.
As always, good planning in advance saves a lot of work.
5. Benefits for companies and employees
In addition to tax benefits, well-organized Christmas parties increase motivation and promote team spirit. By using the legal requirements, companies can make optimal use of their budget and at the same time do something good for employees. This means that nothing stands in the way of an all-round successful Christmas party.
conclusion
The tax-free options at Christmas parties offer companies a double advantage: They save taxes and promote employee loyalty. If all requirements are met, companies can provide up to 110 euros per employee for the event tax-free, including Christmas gifts. Careful planning and documentation is key to taking full advantage of these benefits.
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