Tax Treatment of Gifts in Germany

1. Introduction

The tax treatment of gifts poses challenges for many companies. Especially the various exemption limits and documentation requirements often cause uncertainty. This article gives you a clear overview of the most important regulations and shows how you can simplify the process with Presentolo's gift link platform.

2. Legal Foundations

The tax treatment of gifts is primarily determined by the following regulations:

• § 4 Abs. 5 Nr. 1 EStG: Establishes the tax treatment of gifts as business expenses. Since 01.01.2024, an exemption limit of 50 euros per year for business partners applies.
• § 37b EStG: Allows the gifting company to take over the tax with a flat tax rate of 30% (plus solidarity surcharge and possibly church tax).
• § 8 Abs. 1 EStG: Regulates the tax distinction between benefits in kind and cash wages for employee gifts.

3. Gifts to Customers & Business Partners

The 50-Euro Limit

For gifts to business partners, an annual exemption limit of 50 euros per recipient applies [§ 4 Abs. 5 Nr. 1 EStG]. Gifts to business partners up to this limit can always be deducted as business expenses. Whether VAT must be included in this exemption limit depends on whether the gifting company is entitled to input tax deduction. If yes, then the net value of goods applies, otherwise VAT must be added. The following should also be noted:

• The limit applies per recipient and fiscal year
• This is an exemption limit, not an allowance - if exceeded, the entire amount is not deductible as a business expense

Flat-rate taxation according to § 37b EStG

If the gifted business partner is an entrepreneur, the value of the gift must usually be taxed as business income. To prevent the recipient from having to tax the gift, the giving company can take over the tax at a flat rate. This is done through flat-rate taxation of 30% plus solidarity surcharge [§ 1 Abs. 1 Nr. 3 SolZG] and possibly church tax [Anhang 21b LStH 2023]. The assessment basis for the flat-rate tax is the gross expenses [§ 37b Abs. 1 EStG].

4. Gifts to Employees

Benefits in Kind and Tokens of Appreciation: Important Distinction

Allowances to employees can always be deducted as business expenses without limit. However, in the tax treatment of these allowances as wages, the distinction between regular benefits in kind and tokens of appreciation for special occasions is important:

1. Tokens of appreciation for special occasions (60€ limit)

Gifts for personal occasions (such as birthday, wedding, birth of a child, anniversary, etc.) up to a value of 60€ (incl. VAT) per occasion [R 19.6 Wage Tax Guidelines 2015]:

• It must be a pure benefit in kind
• Within the 60€ limit, these gifts do not count as wages and are therefore tax-free
• If the 60€ limit is exceeded, the entire amount becomes taxable wages
• Multiple gifts for different personal occasions are possible
• Tip: Tip: Presentolo gift links also count as benefits in kind

2. Monthly benefits in kind (50€ limit)

Additionally, employees can receive monthly benefits in kind:

• Monthly exemption limit of 50€ for benefits in kind [§ 8 Abs. 2 Satz 11 EStG]
• Must be granted in addition to regular salary [§ 8 Abs. 2 Satz 11 EStG]
• Vouchers must be limited to specific goods or services [§ 8 Abs. 2 Satz 11 EStG and § 2 Abs. 1 Nr. 10 ZAG]
• There must be no cash payment
• Tip: Tip: Presentolo gift links can also be used here

5. Practical Implementation with Presentolo

Presentolo Gift Links Overview

You can choose from three gift link categories:

Specific Assignment of Gifts

When generating a gift link, the following are recorded:

• Recipient type (employee/business partner)
• Occasion of the gift
• Value and category of the gift
• Time of generation
• Name of the recipient

Creation of Receipts

Our Presentolo platform offers:

• Creation of necessary receipts for accounting
• Setting annual tax policies for flat-rate taxation of gifts
• Informing gift recipients about the flat-rate taxation performed (or not performed) by your company

6. Conclusion

The tax treatment of gifts requires careful planning and documentation. With a digital system like Presentolo, you can:

• Save time and effort in administration
• Give gifts efficiently and legally compliant
• Keep track of all created gifts
• Create the documentation necessary for tax treatment

As of: January 2025. This article serves general information purposes and does not replace individual tax advice.