There are some tax limits: EUR 35 for gifts to business friends, EUR 60 for attentions to employees, EUR 50 for salaries in kind to employees, EUR 800 for low-value assets and many more. As a result, attentions that do not exceed the limit of the amount give rise to different tax advantages. We clarify when the gross value and when the net value is relevant.

1st Tax Limits

There are various tax limits. It is important to recognize in the case of exemption limits that the tax advantage is only realized if the amount has not been exceeded. If, however, it has been exceeded, the whole amount is also taxable. The counterpart to this is the allowance. The corresponding amount is always tax-free and only the following euro is subject to taxation. An example of this is the basic income tax allowance.

On the other hand, the salary in kind of an employee is not recognised if the employee receives an advantage of EUR 50 within one month. It is irrelevant if the proportional benefit per month is below. Here, for example, an annual train ticket should be considered. The result is therefore that the employee does not have to pay tax on the emolument, but there is full taxation if the amount of EUR 50 is exceeded.

Gifts to business friends are only deductible as operating expenses if the limit of EUR 35 per capita and year is not exceeded (§ 4 (5) no. 1 EStG). As operating expenses, costs therefore reduce the sum of income. If the amount of EUR 35 is exceeded, the gift does not reduce the total income.

A further limit can be seen in § 6 paragraph 2 EStG. Accordingly, the acquisition costs or production costs of assets of fixed assets which are capable of being used independently may be deducted in full as operating expenses instead of the capitalisation and distribution of expenses in the marketing year of acquisition, production or deposit or opening of the holding, if their value does not exceed EUR 800.

Limits: Then the gross value applies and then the net value

In order to assess whether the limit is met, it is particularly important to determine the value of the grant correctly. However, most grants are also subject to sales tax. The question therefore arises as to whether the VAT should also be added and increase the value to be taken into account.

2.1 Worker-related limit values

For wage tax or employee-related limits, the gross value counts in principle. Therefore, attentions on the occasion of a special personal event of an employee are tax-free up to EUR 60 gross (R 19.6 paragraph 1 sentence 2 LStR). The monthly EUR 50 exemption for remuneration in kind (§ 8(2) sentence 11 EStG) is also such a gross limit.

2.2. Gifts to Business Friends

For gifts to business friends, a distinction must be made according to whether the company is entitled to deduct input tax. If the company is entitled to deduct input tax, the EUR 35 limit is a net limit. On the other hand, without the right to deduct VAT, it is a gross limit. In terms of VAT, it must also be taken into account that according to § 15 paragraph 1a no. 1 UStG costs for gifts do not entitle us to deduct input tax if the deduction is excluded from income tax.

2.3 Limit for low value assets

However, under the limits of § 6 paragraph 2, 2a EStG, i.e. those for immediate depreciation, the net value of the goods always applies, i.e. the acquisition costs or production costs minus the input tax amount contained therein. This is regulated by law. It is irrelevant whether there is an entitlement to deduct VAT. Therefore, there may be an immediate depreciation exceeding EUR 800.

§ 6 paragraph 2a EStG concerns the pool valuation for taxpayers with surplus income invoice. Mobile usable assets of fixed assets capable of independent use with acquisition costs or production costs of more than EUR 250 up to EUR 1 000, irrespective of their useful life, can be recorded in an annual aggregate item as a calculator. However, the right to vote can only be exercised uniformly for all assets of the marketing year with expenses of more than EUR 250 and no more than EUR 1 000.

3rd example of tax limits

For example, the company A-GmbH can provide several gifts. On the one hand, it can give the business friend a thing worth EUR 41 including 19% sales tax. An employee, on the other hand, receives a gift worth EUR 58 without VAT.

For the first gift to the employee, the limit of § 8 (2) sentence 11 EStG must be observed. The gross value therefore applies. The gross value is EUR 62.06 (EUR 58 x 1.07). This exceeds the limit for attentions. Therefore, there is a full wage, so that the employee owes the tax on the entire amount.

When gifting to a business friend, the limit value of § 4 paragraph 5 no. 1 EStG must be observed. If A-GmbH is entitled to deduct input tax, the EUR 35 limit is a net limit. Without deduction, however, it is a gross limit. Since A-GmbH is entitled to deduct input tax, the costs are deductible.