September 24, 2026

Company event tax allowance in Germany: the €110 rule

At a company event (Betriebsveranstaltung) in Germany, benefits of up to €110.00 per participating employee stay tax-free, for no more than two events a year (§ 19(1) sentence 1 no. 1a of the Income Tax Act, EStG; amount in force since January 1, 2015). You divide all costs including VAT by the number of guests who actually attended and add a companion's share to the employee who brought them. Anything above the allowance is wages, which the employer can tax at a flat 25% if the event is open to all staff.

What counts as a company event

A company event is an event at company level with a social character (§ 19(1) sentence 1 no. 1a EStG). Think holiday party, summer party, team outing or anniversary celebration. It doesn't matter who hosts it: the Federal Ministry of Finance (Bundesministerium der Finanzen, BMF) treats the employer, the works council (Betriebsrat) and a public-sector staff council alike in its guidance of October 14, 2015. Most guests must be employees, plus their companions and, where relevant, agency workers or staff from group companies.

Honoring a single employee, such as a farewell or a service anniversary, is not a company event, even if the team joins in. A working meal (Arbeitsessen) isn't one either. Separate rules in the wage tax guidelines (Lohnsteuer-Richtlinien, LStR) cover those occasions (R 19.3(2) and R 19.6(2) LStR), and the allowance doesn't help there.

The allowance, with its legal basis and effective date, comes from the tax-free benefits dataset for any date since 2015. The same dataset holds the monthly limit for benefits in kind and the limit for small gifts, both of which you need to keep apart from the party.

An allowance, not a threshold: the conditions

For each event and each participating employee, €110.00 stay tax-free. Because it's an allowance (Freibetrag), only the part above it is taxed. Until the end of 2014 it was a threshold (Freigrenze): a single euro too much made the whole benefit taxable.

Two conditions apply. First, the event must be open to all members of the company or of a business unit. A department party qualifies if everyone in the department can come, and so does a party for everyone celebrating a round service anniversary. An event that favors certain groups, such as the leadership team only, does not qualify (BMF guidance, item 4 b).

Second, the allowance covers at most two events per year. If someone attends more, you can pick the two events the allowance applies to (item 4 c). For every further event, the full share is wages. The exception is attendance as part of the job, for example when the HR director or works council members visit several department parties: their share at those events is not wages.

Costs that go into the calculation

Food, drinks, tobacco and sweets.
Travel and accommodation the employer pays for, such as a shared bus from the office to the venue.
Music, performances and tickets, unless the event consists of nothing more than attending a concert or a game.
Gifts, including gifts handed out later to employees who couldn't attend. A cash payment instead of such a gift does not count here.
Benefits for companions, and cash paid instead of a benefit in kind if it is certain to be spent on it.
The setting: venue rent, lighting and event managers, plus paramedics, official requirements, cancellation fees and tips.

What stays out

The employer's internal costs stay out: payroll's effort to process the benefit, a share of depreciation, and energy and water costs when you celebrate on your own premises (BMF guidance, item 2).

If employees from another site travel in on their own, their travel, lodging and meal allowances are travel expenses, not part of the event. The employer can reimburse them tax-free (item 6), and the rates are in the domestic travel allowances dataset. If the employer organizes a shared bus from the office instead, the bus is part of the event.

Five steps to the taxable amount

Add up all costs of the event including VAT, the setting included.
Divide the total by the number of guests present, companions included. No-shows don't count, so their share is spread across everyone who came (Federal Fiscal Court, Bundesfinanzhof or BFH, judgment of April 29, 2021, VI R 31/18).
Add a companion's share to the employee they came with. Companions get no allowance of their own.
Deduct the allowance from each employee's amount, provided the event is one of the two qualifying events of the year.
Process the rest as wages: taxed at a flat 25%, or taxed individually through regular payroll.

Worked example: holiday party with and without cancellations

Item	Everyone attends	20 cancellations
Costs including VAT	€10,000.00	€10,000.00
Employees, of whom with a companion	75, of whom 25	55, of whom 25
Guests present	100	80
Cost per guest	€100.00	€125.00
Allowance per employee	€110.00	€110.00
Taxable per employee without a companion	€0.00	€15.00
Taxable per employee with a companion	€90.00	€140.00
Taxable in total	€2,250.00	€3,950.00
Flat-rate wage tax at 25%	€562.50	€987.50

Source: Left column: example from the BMF guidance of October 14, 2015, item 4 a

Reading the example

The left column is the example from the BMF guidance. €10,000 is spread over 100 guests. The 50 employees who came alone are at €100, below the allowance. For the 25 employees with a companion, €200 counts, of which €90 is taxable.

In the right column, 20 employees without companions cancel at short notice. The caterer and the venue still bill the same amount, and cancellation fees count anyway. Each guest's share rises to €125, and now everyone is above the allowance. For payroll, this means you fix the headcount after the event, based on the actual attendance list.

What happens above the allowance

The part above the allowance is wages. The employer can tax it at a flat 25% (§ 40(2) sentence 1 no. 2 EStG). The employer owes this flat-rate wage tax itself, and the flat-taxed amount is left out of the employee's income tax assessment (§ 40(3) EStG).

Since January 1, 2026, the flat rate is only available if the event is open to all members of the company or a business unit. The Tax Amendment Act 2025 (Steueränderungsgesetz 2025) added this condition to § 40(2) sentence 1 no. 2 EStG. In 2024, the Federal Fiscal Court had ruled that an event not open to everyone can still be a company event within the meaning of that provision (BFH, judgment of March 27, 2024, VI R 5/22). For a leadership-only party, the flat rate under § 40(2) EStG has not been available since 2026.

For social security, the tax-free part is contribution-free. The flat-taxed part is contribution-free as well, provided the employer applies the flat tax in the payroll for the month of the event (§ 1(1) sentence 1 nos. 1 and 3 and sentence 2 of the Social Security Remuneration Ordinance, SvEV). If the employer taxes the amount individually instead, it counts as pay subject to contributions.

The €50.00 monthly limit for benefits in kind (Sachbezugsfreigrenze) doesn't help once you're above the allowance. The BMF guidance explicitly rules it out for benefits provided on the occasion of company events (item 4 a).

Common payroll mistakes

Using net costs. VAT belongs in the calculation, even if the employer deducts input VAT.
Dividing by registered guests instead of the guests who attended.
Giving companions an allowance of their own.
Offsetting the amount above the allowance against the monthly limit for benefits in kind.
Not applying the flat tax in the payroll for the month of the event. Contribution-free treatment depends on it (§ 1(1) sentence 2 SvEV).
Treating a third event in the year like the first two.

Small gifts, gifts at the party and other benefits in kind

Flowers for a birthday are not a company event but a small gift (Aufmerksamkeit). Benefits in kind of up to €60.00 given for a special personal occasion are not wages (R 19.6(1) LStR). Cash, however, is always wages, even a small amount.

Gifts at the party count toward the event costs if they are handed out on the occasion of the party. According to the BMF's reply letter of December 7, 2016, gifts worth up to €60 per person can be included this way. For more expensive gifts, check case by case whether they are given on the occasion of the party or merely while it takes place. In the second case, the general rules for benefits in kind apply.

A gift in December that has nothing to do with the party is checked against the monthly limit for benefits in kind under § 8(2) sentence 11 EStG. Which amounts an employer may pay tax-free and which only work as the employee's own deductible expenses is shown in the wirkung field, described in the dataset reference.

Getting the allowance into payroll software

Payroll needs the value on the date of the event, not today's. Query the dataset with the event date and the bestandteil parameter, and you get exactly one entry with amount, type, effect and legal basis. On the MCP server, the tool is called hr_steuerfreie_betraege.

The response also includes a zitat field with a ready-made citation sentence in German, including the source, which you can reuse in a payslip note or a chatbot answer. How effective dates work across all responses is explained under effective dates and validity.

Request with curl

bash

curl "https://api.quellenkontor.dev/v1/hr/steuerfreie-betraege?datum=2026-12-04&bestandteil=betriebsveranstaltung_freibetrag" \
  -H "Authorization: Bearer $QK_KEY"

Excerpt of the response

json

{
  "datensatz": "steuerfreie-betraege",
  "datum": "2026-12-04",
  "bestandteil": "betriebsveranstaltung_freibetrag",
  "werte": { "betriebsveranstaltung_freibetrag": 110 },
  "bestandteile": [
    {
      "id": "betriebsveranstaltung_freibetrag",
      "art": "freibetrag",
      "wirkung": "steuerfreie_arbeitgeberleistung",
      "einheit": "euro",
      "wert": 110,
      "rechtsgrundlage": "§ 19 Abs. 1 Satz 1 Nr. 1a Satz 3 und 4 EStG in der Fassung von Artikel 5 des Gesetzes vom 22. Dezember 2014 (BGBl. I S. 2417)"
    }
  ]
}

The same value with the Python SDK

python

import os
from quellenkontor import Quellenkontor

qk = Quellenkontor(api_key=os.environ["QK_KEY"])
r = qk.hr.steuerfreie_betraege(datum="2026-12-04", bestandteil="betriebsveranstaltung_freibetrag")
print(r["werte"]["betriebsveranstaltung_freibetrag"])
# 110

This calculation applies § 19 EStG and the BMF guidance schematically. Whether an event is open to everyone, whether a gift is given on the occasion of the party, and what collective or works agreements provide depends on the individual case. For a binding answer, the employer can ask its payroll tax office for a ruling (Anrufungsauskunft, § 42e EStG).

Frequently asked questions

Do agency workers and employees of group companies count?

Yes. For simplicity, the tax authorities accept including them if the event is open to everyone in their group (BMF guidance, item 3). Either the company hosting the event or the actual employer can tax the benefit. If the host uses the allowance, it has to confirm with the employer that the limit of two events a year is met (item 5).

Does the allowance apply to retirees?

Yes. § 19(1) sentence 1 no. 1a EStG covers former employees as well as current ones, plus interns and trainees (item 3). A gathering of all retired former employees of the company is a qualifying company event (item 4 b).

What about a farewell party for a single colleague?

That is not a company event. Customary benefits in kind for a farewell, a round service anniversary or someone taking up a post are not wages under R 19.3(2) no. 3 LStR as long as costs including VAT don't exceed €110 per participant, with gifts of up to €60 counted in. Above that, the whole amount is added to the honored employee's wages.

Does the allowance also apply to input VAT?

No. For VAT purposes, €110 including VAT per employee and event works as a threshold. If the share is higher, the tax authorities assume a benefit driven by the employees' private needs, and input VAT can't be deducted if that use was already intended when buying (BMF guidance, item 7, and section 15.15 of the VAT Application Decree, UStAE).

Can the employer pass the flat-rate tax on to employees?

For tax purposes, flat-rate wage tax passed on to employees counts as wages received and does not reduce the tax base (§ 40(3) sentence 2 EStG). Employees then bear the tax out of their net pay, while the tax base stays the same.