No input tax deduction for company events and exceeding the EUR 110 limit

In its ruling of May 10, 2023(V R 16/21), the BFH decided on the deduction of input tax in connection with company events. It was disputed whether an input tax deduction was permissible when the payroll tax allowance of EUR 110 was exceeded in accordance with the general economic activity, or whether the tax office was justified in refusing this in its entirety – and not only on a pro rata basis.

The basics

First of all, a distinction must be made as to whether the input service isused for the purposes ofthe economic activity, i.e.“used primarily for the needs of the taxable person” (marg. no. 21), or exclusively for the purposes of the private needs of his employees. According to established case law, private interests regularly predominate in the case of company events such as summer parties, Christmas celebrations or company outings, even though taxpayers are likely to make budgets available for these events not least for business reasons, i.e. to improve the working atmosphere.

Purchase for the private needs of the staff – and now?

No taxation of withdrawals within the meaning of § 3 para. 9a No. 2 UStG only applies if the benefits are “attentions” (marg. no. 29). Then the input tax deduction would be allowed again according to the general rule.

So how does the concept of attentions define itself?

The concept of attention is not defined by law and, to the letter, is not found in Union law. With regard to Art. 16 subpara. 2 of the VAT Directive as the basis of this restriction under EU law, gifts of attention probably correspond to “gifts of small value” (marg. no. 30).

Even if turnover tax law is to be assessed on its own merits in accordance with Union law and, accordingly, not in accordance with other national laws, the BFH, in order to “preserve a uniform application of the law”, leaves the case law on wage tax amounts to be applied.

The decision

Accordingly, “attentions” within the meaning of § 3 para. 9a No. 2 UStG is always given for company events if the total amount per employee does not exceed EUR 110 (net). Consequently, the input tax deduction is to be denied if the amount of EUR 110 is exceeded.

Allowance vs. exemption limit

Even though this is an allowance under income tax law, the BFH explicitly points out in this ruling that it is an exemption limit under value added tax law. This would result explicitly from the wording of the standard (para. 35).

Practice Consequences

In practice, and especially against the background of a functioning Tax CMS, care must be taken to ensure that a suitable process is implemented in the interaction between the HR department – which is regularly responsible for payroll tax issues and company events – and the financial accounting department – which must post incoming invoices – that takes this judgment into account. In detail, this means that if the limit per employee is exceeded, a corresponding note must be given so that the corresponding invoices per company event are posted without input tax. With regard to the determination of the EUR 110 limit, the tax department or tax advisor should provide appropriate guidance, as this may differ from the payroll tax determinations.


The draft of the JStG 2023 (cf. blog post here) provides for an increase in the payroll tax allowance from EUR 110 to EUR 150. This should then apply accordingly to VAT for the concept of attentions, so that corresponding processes and work aids must be adapted.

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