SteuerGo FAQs

(2023) Are the costs for introductory and farewell meetings deductible?

With a larger or smaller reception, drinks, or snacks, significant personal events are often celebrated, such as work anniversaries, promotions, birthdays - but also welcome and farewell gatherings. The tax offices believe that in such cases, the entertainment costs serve personal representation and therefore refuse to recognise the costs for tax purposes.

However, the Federal Fiscal Court and several tax courts have now clarified that entertainment costs on the occasion of welcome and farewell gatherings are professionally motivated and can therefore be deducted as business expenses. Welcome and farewell gatherings are - unlike birthdays or other celebrations in the private sphere - not highly personal private events. Retirement is - despite the personal event - the last act of active service and is therefore still part of the professional activity (BFH ruling of 11.1.2007, VI R 52/03).

For example, the Hessian Fiscal Court recognised the costs of the farewell party for a tax official on the occasion of his departure from office and civil service as business expenses. (Hessian FG of 23.4.2013, 3 K 11/10). The piquant aspect of the matter is that the tax official did not retire but "switched sides" and became a tax advisor. However, this does not matter, as the case is no different from the termination of employment due to reaching retirement age.

The costs for entertaining colleagues and employees are not only 70% deductible, as is the case with entertaining business partners, but in the actual amount incurred. This involves entertaining internal company personnel, i.e., entertainment for a "professional" occasion (R 4.10 paras. 6 and 7 EStR).

This also means that the strict proof requirements using formal entertainment receipts do not apply. The invoice from the catering service or corresponding purchase receipts are sufficient.