German Company Taxes

Entertainment expenses in the tax declaration

Often it happens that customers or other business partners are visiting their own company. Since you do not want the guests to leave them stranded, these are then naturally entertained accordingly.

Spending on entertainment, the so-called entertainment expenses can become a part as operating expenses in the income tax return with enter. Up to 70 percent of the costs incurred can be deducted from the tax. However, this deductibility is subject to strict conditions. First of all, the catering must be appropriate according to the general view, and exaggerated piety therefore leads to the fact that the catering costs will not be recognized. In addition, the business establishment of a restaurant must be proven to the tax office without any doubts. In order to be able to demonstrate to the tax office that the catering was operational and to what extent it had food expenses, you must provide the following details: place, date, occasion and participant of the event as well as the total amount of expenses incurred. If the catering is held in a restaurant, it is sufficient if you provide information on the event and the participants and add the bill of the restaurant. In addition, catering invoices under 150 Euros must contain the name of the host.If you are unable to prove the company's incentive or the amount of the expenses, the cost of catering will not be recognized as an operating expense.

Entertainment expenses are not deductible in full.

Only 70 percent of the actual catering expenses can be claimed as operating expenses, even if all the above conditions are fulfilled. For the correct calculation, you deduct the actual service costs the privately incurred and unreasonable expenses of the catering as well as those catering expenses, which you can’t prove without doubt. The result is the preliminary entertainment expenses. Of these, you then deduct 30 percent. The end result is the cost of catering that you can claim as operating expenses on your tax return.

Operating expenses as employees

Even as an employee, you can put under certain circumstances, your entertainment expenses in your tax declaration. Then, however, not as operating expenses, but as advertising costs. You must also fulfill certain requirements:
If you entertain a customer as employees, then the costs will be recognized by the tax office. If you receive a work based salary from your employee then you can justify advertising in the form of a catering.
Even if you serve your work colleagues and business partners for a service jubilee or retirement, you can pay the expenses for this as advertising costs. Then the festival must be purely professional and no private guests may be invited.