Entertainment costs (Germany)
Entertainment expenses are tax law expenses for the entertainment of people who are not employees of the taxpayer.
This includes meals, drinks and stimulants intended for immediate consumption as well as ancillary costs that are inevitably incurred in connection with the catering, e. B. Cloakroom Fees. However, food must generally be in the foreground. This does not include, for example, night club visits , as the total costs are disproportionate to the entertainment expenses.
Hospitality costs as business expenses / advertising expenses
In general, a distinction is made in non-deductible costs of general lifestyle and operationally / professionally motivated charges to § 4 para. 4 Income Tax Act , which as operating expenses / business expenses are deductible.
Non-deductible general living expenses
Costs that are mainly attributable to a private occasion (e.g. birthday) are classified as costs of general living and are therefore not deductible as operating costs, i. H. non-deductible general living expenses
Business-related costs
If the employer determines the day and place of a meal or the expenses incurred are reimbursed under service or labor law and the invoice is made out to the employer, this is business-related entertainment costs.
Hospitality for business friends
According to section 4 (5) no. 2 sentence 1 EStG, business-related hospitality for business friends, i. h. if the entertainment serves the business relationship or its establishment, the expenses are partially claimed as operating expenses, d. That is, the expenses are subject to a deduction restriction: Only 70% of the costs are deductible as business expenses. Business friends are (potential) customers, suppliers, sales representatives, colleagues, members of the press, representatives of the public, tax advisors , legal advisers and visitors to the company, including accompanying persons.
appropriateness
Attention must be paid to the appropriateness of the entertainment expenses. Inappropriate expenses are not deductible as business expenses. A distinction is made between the type of unreasonable cost and the amount unreasonable. Unreasonable expenses by nature are entirely non-deductible. Going to a nightclub is another example. Whether or not hospitality expenses are inappropriate in terms of the amount of the costs depends on the respective circumstances and the usual conditions in the industry. Hospitality expenses that are inadequate in terms of amount must be divided into an unreasonable part that is not deductible and an appropriate part that may be deducted from the operating costs.
Record keeping
According to Section 4 (5) No. 2 Sentences 2 and 3 EStG, the taxpayer must provide the following information to prove the amount and the operational cause of the expenses:
- place
- Day
- Attendees
- Occasion of the hospitality as well
- Amount of expenditure.
In the case of hospitality, the amount of which exceeds € 150, the invoice must also contain the following information in accordance with Section 14 of the UstG:
- Name and address of the host (host)
- Invoice amount broken down according to tax rates and VAT rate and amount
- Tax or sales tax identification number of the restaurant.
If the catering took place in a restaurant, information on the occasion and participants as well as the attachment of the invoice for the catering, which must comply with the sales tax regulations, is sufficient. The invoice must be generated and registered automatically (R 4.10, Paragraph 8 EStR 2012). Other forms of invoices, e.g. B. handwritten, are not sufficient and are therefore not deductible as business expenses.
