Get advice now
+49 30 639 028 6-0

DE

Payroll tax exemption limits for company celebrations

Background

We are often asked whether we can provide information about the payroll tax allowance for company events. The background is that events such as work Christmas parties can quickly become expensive - not only for the employer, who acts as the organizer, but also for the employees. Why? Because if the costs of a company celebration exceed a certain amount, they are subject to payroll tax and social security contributions. This might sound strange, but it’s the law.

Legal basis

The basis for this is §19 para. 1, sentence 1, no. 1a of the Income Tax Act. The tax office assesses the food, drinks, entertainment costs, etc. as non-cash benefits. Company events are only tax-free if:

If this allowance is exceeded, only the excess amount is subject to payroll tax and social security contributions. However, the employer also has the option of applying a flat payroll tax rate of 25%. This results in an exemption from social security contributions.

Calculation

The total cost of the event is divided by the number of guests.

For example, the calculation should take into account the following: food, drinks, venue hire and musical performances.

For further information and detailed advice, please ask your tax accountant as we are not permitted to provide tax advice. Hence we take no responsibility for the correctness of the information provided here.