Tax tip: Public viewing and VIP lounges at sporting events - what needs to be considered for tax purposes?

Major events such as the European Football Championship, the Olympics or the Bundesliga offer companies an opportunity to invite business partners to a sporting event. Public viewings with employees can strengthen team spirit. However, tax requirements must also be taken into account here.

An invitation to a sporting event regularly constitutes income for the business partner, which is generally taxable. However, the inviting company has the option of deducting the tax for the business partner at a flat rate of 30 per cent - plus solidarity surcharge and flat-rate church tax.

If the invitation is to a VIP box or a business seat, the expenses incurred must be divided into advertising (40 per cent), hospitality (30 per cent) and a gift (ticket, 30 per cent). If there is no advertising opportunity for the inviting company, the expenses are divided equally between hospitality and the gift. Only the proportionate amount attributable to the gift triggers taxable income for the invited business partner. Here too, the inviting company can make a flat-rate tax deduction. Expenses for the advertising portion can be deducted in full as business expenses, while only limited or no deduction can be made for the hospitality and gift portions. There is no tax liability if the value of the gift presented (acquisition cost) does not exceed ten euros.

Joint public viewings with employees may be subject to income tax as a company event. If participation is open to all employees of the company, an allowance of 110 euros per person can be used for the share of costs incurred by the employees. This allowance is available a maximum of twice per employee per year. If the allowance is exceeded or has already been used for other events, the employer can tax the expenses at a flat rate of 25 per cent plus solidarity surcharge and church tax. This flat-rate taxation leads to exemption from social security contributions.