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Business entertainment usually takes place in restaurants or hotels, but it can also take place in the office or during fairs, for example. 70% of entertainment costs are tax-deductible if they are caused operationally and certain formal requirements are met. The German input VAT is generally 100% creditable.

If exclusively own employees receive food and drinks, there is no catering of third parties for operational reasons. In this case, special regulations apply which are not dealt with further here.

The entertainment receipt must first fulfil the general formal requirements of an invoice (§ 14 UStG). This includes, among other things, the information about the supplier, invoice number, name of food and drink, etc. Most restaurant invoices are so-called small amount invoices up to EUR 250.00. For these small amount invoices, the service recipient does not have to be named.

However, it must be an electronically printed invoice from the POS system. Hand-written invoices are not recognised by the tax office.

The following records are also required for the recognition of company hospitality:

1. Date/Place of entertainment
 
2. Participants
List all participants by name and company if applicable. Important: including the person hosting the event.

3. Business cause of entertainment
 
Meaningful keywords are sufficient for the concrete cause, e.g. "discussion of annual financial statements 2018", "planning website company Müller", "discussion of bookkeeping June 2019". Even if no long- version explanations are required, care must be taken to ensure that the operational reason is clearly identifiable. General descriptions are not accepted by the tax office, for example "meeting", "business lunch", "working lunch" or similar.

4. Signature
 
Finally, these records must be signed in a timely manner, stating place and date.

If these recording obligations are not fulfilled, entertainment costs are not tax-deductible for formal reasons alone.

If you tipped at the restaurant, it is also tax deductible. The tip should be entered by you on the catering statement, if possible with the counter-signature of the service.

We recommend that you use the attached form for the records, unless the information can already be provided directly on the entertainment receipt.

Please do not hesitate to contact us for any questions

Björn Christian Gerow

Steuerberater Fachberater IStR

+49-211-17257-15

b.c.gerow@egsz.de