Many companies use the turn of the year to give a gift to long-standing business partners. Current plans include increasing the allowance for gifts.
A bottle of wine, a nice book or a box of chocolates – many companies thank their business partners with a small gift for the good cooperation. This can strengthen the business relationship and expresses appreciation.
Note allowance for operating expense deduction
However, from a tax perspective, it must be noted that the operating expense deduction is only granted if the business-related expenses do not exceed 35 euros per recipient per financial year. If the gift is more expensive, the operating expenses are not deductible – and therefore do not reduce the profit for tax purposes either. By the way, other regulations apply to gifts to employees – but here we only want to consider gifts to business partners.
Example: A company gives its business customer a book gift with a value of around 38 euros. The expenses cannot be claimed as operating expenses, as the allowance per recipient has been exceeded. If the company had chosen a book gift with a value of around 34 euros, it could claim the expenses as operating expenses and thus also reduce its profit and tax burden.
Growth Opportunities Act provides for amendment
Especially when the Christmas season is approaching, many companies use the option of giving gifts to business partners. For financial years up to 31.12.2023, the allowance of 35 euros still applies. However, with the so-called Growth Opportunities Act, the legislator plans to increase this allowance:
For financial years beginning after 31.12.2023, the allowance is to be increased to 50 euros. The Growth Opportunities Act still has to pass the Bundestag and Bundesrat. It is expected that the law will be announced in December 2023. Although the announcement is planned for this year, it must be noted that the new allowance should only be applied to financial years that begin after 31.12.2023!
How does the increase in the allowance affect?
The increase in the allowance gives companies more opportunities in business customer care. So if, for example, you want to give a business partner both a Christmas gift and another gift of 20 euros each, you do not have to fear that the operating expense deduction will be jeopardized. The expenses can therefore be claimed to reduce profit and thus tax.
Tip: Flat-rate taxation of gifts
So that the gift is actually a “gift without burden” and does not have to be taxed by the recipient, the donating company can take over the flat-rate taxation according to § 37b EStG with a tax rate of 30 percent. However, this must also be communicated to the recipient. The gift should therefore be accompanied by a corresponding letter – because the recipient also needs this information in writing for his records.
Note recording obligations
Important with regard to gifts to business friends is therefore in particular the documentation in the accounting. Special records are required for gifts. They must be recorded individually and separately from the other operating expenses and in a timely manner. This topic in particular is very popular with auditors. Therefore, companies should ensure that the records are properly made and that the allowances are strictly adhered to.
Image source: Adobe Stock Photographer: Cat back G
Author
Sylvia Meier
Guest Author
Sylvia Meier is a certified financial economist (FH) and has worked at the tax office, in consulting (Big Four firm), and for a specialized publisher. Today, as a freelance consultant, she supports companies and can demonstrate numerous publications, particularly on the topics of taxes, controlling, accounting, and finance.
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