Under tax law, gifts to business partners and their employees may only be deducted as business expenses if
- their value per person and year does not exceed € 50 and
- the gift expenses are recorded individually and separately from the other operating expenses.
The €50 limit is an exemption limit, so that the deduction of operating expenses Total not applicable, if the acquisition or production costs exceed the amount of € 50 per recipient and year. Recipients can be natural persons and legal entities (e.g. a GmbH). Benefits to employees of the GmbH (e.g. shareholder-managers) are not automatically to be regarded as benefits to the GmbH. Every person with whom an entrepreneur has dealings in business life is to be regarded as an independent recipient of benefits, e.g.
- the managing director of the GmbH,
- the secretary,
- the marketing assistant etc.
However, in the opinion of the tax authorities, the entrepreneur and his spouse are treated as „a recipient“.
How the €50 exemption limit is determined for several gifts to one person:
- An entrepreneur gives his customer a gift worth €50 in January 2026 and a gift worth €50 in December 2026. As the total amount is €100, the entrepreneur cannot claim a tax deduction for business expenses for either gift.
- An entrepreneur gives his customer a gift worth €50 in December 2025 and January 2026. He can deduct both gifts as business expenses, provided he does not give this customer another gift in 2026.
Even if the €50 limit is exceeded by just 1 cent, the deduction of operating expenses will no longer apply. It is therefore important to pay close attention to what is included in the acquisition and/or production costs. Acquisition or production costs include the costs of labeling the gift as an advertising medium, the VAT, which may not be deducted as input tax, but not the packaging and shipping costs. If the entrepreneur taxes the gifts at a flat rate of 30%, the flat-rate tax is also included in the gifts. But: The flat-rate tax is not included when determining the threshold value of € 50 (BMF letter dated 19.5.2025, IV C 6-S 2297-b/14/10001 margin no. 25.26).
The recipient of the gift is an employee, who works for a company that has a business relationship with the donor's company. Consequence: The recipient is not an employee in the company of the entrepreneur/company making the gift. It is therefore a gift to an employee who is employed by another company. The gift is personal and therefore cannot be reinterpreted as a gift to the company.
Benefits from a third party to the employee only lead to wages in exceptional cases. The prerequisite for the assumption of wages is the causal connection between the granting of benefits and work performance. The benefits must therefore be remuneration „for“ services provided by the employee that the employee performs, has performed or is to perform for his employer within the scope of the employment relationship. The benefit from the third party must be perceived by the employee as the result of their work for the employer and must be related to the employment relationship. In addition to salaries and wages, income from employment also includes remuneration granted to the employee by a third party for employment. It does not matter whether it is a regular or one-off payment and whether there is a legal entitlement to it. However, emoluments or benefits are only granted for employment if they are based on the individual employment relationship. It is not necessary for them to be based on a consideration for a specific (individual) service provided by the employee. This means that a gift is not to be recorded as wages if it is not a payment of wages by a third party.