Deducting Presents for Xmas / Chanuka

 

'Tis the season to be jolly but also generous to one's business contacts, main clients, etc. It is a nice gesture to say "Thanks!" with a present. But the list of your deductions will only increase when you pay attention to some small and simple rules. The main issue is the price of the item! However, what counts is only the sales price and not any "postage & packaging)" or any insurance costs per person (§4 V 1 no. 1 EStG). All deductions must booked in a special account or column for deductibility (§4 VII EStG). When you forget to obey this formality, the next audit will throw it out of your deductions.

This is also applicable for your employees. However, gifts to colleagues and partners can normally not be deducted unless you were supposed to give them for operational reasons and your boss refused reimbursement.

Different price brackets have different tax results:

 

 

Income / VAT

 

up to € 10

100% deductible

It will be ex lege assumed that the threshold will be not exceeded.

Between € 10.01 and € 35 100% deductible when booked in separate account and recipient's name can be taken from a receipt.

Above € 35

Not deductible

This is considered as a non-deductible operational expense (nicht absetzbare Betriebsausgabe)