(2022)
How to claim hospitality expenses as income-related expenses for tax purposes!
Employees are generally reimbursed for the costs of entertaining clients on behalf of their employer. However, this may differ if the employee receives performance-related payments, for example.
As a general rule: Costs incurred by an employee for entertaining guests on the occasion of a personal event (birthday, promotion, anniversary, etc.) are considered non-deductible private expenses according to established case law. The Federal Fiscal Court (BFH) has ruled that the occasion of the event should not be the sole decisive factor, but that other circumstances should also be considered as part of an overall assessment (judgment of 11 January 2007 VI R 52/03).
For the professional or private nature of the entertainment expenses, it is also important, for example, where the event takes place, who acts as host, who determines the guest list, and whether the guests are colleagues, business associates, press representatives, or private acquaintances or relatives of the taxpayer.
Thus, the BFH refers to aspects on the expenditure side that it has developed on the income side for the distinction between taxable wages and benefits in the employer's own business interest.
Electronic cash registers are subject to special recording and security obligations to prevent manipulation. The so-called Cash Register Security Ordinance requires that issued receipts must contain a transaction number and the serial number of the electronic recording system or the serial number of the security module. Although the Federal Ministry of Finance (BMF) stipulates that the deduction of income-related expenses or business expenses by the customer should not be cancelled if the information required by the Cash Register Security Ordinance is missing from the invoice, a transitional regulation applies until 31 December 2022. However, since the new security features are mandatory when using electronic cash registers, we believe that customers should already ensure that the entertainment receipts they receive are provided with the relevant information, possibly in the form of a QR code.
If the restaurant (inn, bistro, bakery, cafe, snack bar) does not have an electronic cash register: The Berlin-Brandenburg Fiscal Court has recently ruled against the tax authorities that handwritten invoices are formally sufficient as entertainment invoices; the invoice from the restaurateur does not need to be machine-printed. Consequently, such entertainment expenses are also 70 percent deductible. There is no legal basis for the tax office's assumed requirement for a machine-printed invoice (Berlin-Brandenburg Fiscal Court of 8 November 2021, 16 K 11381/18).
Note: Trust is good, control is better. Check that you have actually received the final receipt and not an "interim invoice", a "waiter's receipt" or similar. Only the final receipt is recognised by the tax office.
