Deduct advertising materials from tax.

New 50 euro limit for promotional gifts

Companies are allowed to deduct many advertising expenses as business expenses. What is new is that the limit for gifts to business associates has been raised from 35 to 50 euros net per recipient per year.

This rule applies to financial years beginning after December 31, 2023 – i.e. generally from January 1, 2024

Further background information on the resolutions of the Bundestag, Mediation Committee and Bundesrat can be found here.

Note: This information does not replace tax advice. Please discuss the details with your tax advisor.

Advertising costs are all expenses with which you draw the attention of customers, business partners or employees to your company. These include, for example, classic promotional items, giveaways at trade fairs or high-quality gifts for special occasions.

For the tax office, these expenses are only business expenses if a proper invoice is available. Certain value limits and documentation requirements also apply to gifts.

But what specific value limits apply, what flat-rate tax rates are possible and when is proof of receipt required? We will be happy to provide you with initial guidance on these questions – please contact us.

§Section 37b EStG regulates tax deductibility. Promotional items are generally deductible as advertising costs.

Promotional items always affect three sides for tax purposes:

  • the recipient of the gift

  • the company that gives

  • the manufacturer or retailer of the promotional product.

The recipient asks: Do I have to pay tax on the gift? The company giving the gift asks: Can I deduct the full cost as a business expense? Manufacturers and retailers should be able to provide simple information on how certain items should be classified for tax purposes.

Very inexpensive promotional items – such as ballpoint pens or key rings – are usually considered unproblematic in practice. A value of around EUR 10 net per item is often used as a guide as long as it is mass advertising without personal selection.

Some sectors are stricter. In the pharmaceutical industry, for example, voluntary limits of around 5 euros per advertising gift are common. These limits are not general tax laws, but are important in practice.

Companies can tax certain gifts at a flat rate of 30% in accordance with Section 37b EStG. The company pays the tax in addition and thus relieves the recipient of their own tax liability.

Whether this flat-rate tax makes sense depends on the individual case. This should always be discussed with your tax advisor.

Gifts to business associates are deductible as business expenses up to EUR 50 net per recipient and year. If this limit is exceeded, the entire gift is not tax-deductible.

Important: This limit applies to gifts, not to classic giveaways as part of mass advertising. Precise planning and recording is therefore particularly useful for high-quality promotional gifts.

Gifts must be specially recognizable in the accounting. A separate account for “promotional gifts” is recommended for this purpose, in which all corresponding expenses are collected.

A list of recipients should also be kept. This contains the name, occasion and value of the gift for each recipient. This makes it easier for the tax office to check the deductibility.

Would you like to use advertising materials in a targeted manner and at the same time act in a tax-compliant manner? We support you in the selection of suitable articles and provide guidance on typical tax issues relating to promotional gifts?

Talk to us – we will be happy to advise you on 02567-961261 or write to us at info@geigerpromo.de.

TIP

High-value gifts close to the 50-euro limit should be recorded separately from giveaways. This makes it clear which expenses are subject to the strict gift limit and which are not.

Costs for samples, shipping or packaging should be shown separately if possible. It is best to clarify with your tax advisor whether these additional costs count towards the 50 euro limit.